Brattle Group principals Paul Carpenter and Johannes Pfeifenberger were invited by The Van Horne Institute of The University of Calgary to lead sessions at the Performance Based Regulation (PBR) Workshop held in Edmonton, Alberta on May 26-27, 2010, at the request of the Alberta Utility Commission. The purpose of the workshop was to provide energy utility industry participants with an overview of PBR including the policy context, international experience, and process and data issues in advance of a policy initiative announced by the Commission to apply PBR to the gas and electricity distribution utilities in the province. In their sessions, Pfeifenberger and Carpenter emphasized that PBR can benefit both utilities and their customers by encouraging more efficient utility operations without degradation in service quality. However, there are many possible approaches to PBR that have been successfully implemented worldwide, and the choice of approach and the individual components of any PBR plan must be tailored to the collective policy objectives of the regulator, utilities, and consumers. With respect to plan design, the trade-offs between the strength of incentives for efficiency and the sharing of benefits between the utility and its customers, as well as the desire for cost reductions versus service quality and reliability, are paramount. The Alberta Utilities Commission is now expected to commence a proceeding leading to the planned implementation of PBR plans by July 1, 2011, starting with a process for submissions from electricity and natural gas distribution companies and other interested parties. The Brattle Group presentations from the workshop are available for download below and on the website of the Van Horne Institute.
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