Eversource Energy Begins Second Generation of Performance-Based Regulation

Categories: Performance-Based Ratemaking

November 30, 2022 - Mark Meitzen and Nicholas Crowley

The Department of Public Utilities (D.P.U.) in Massachusetts recently approved a second generation performance-based regulation (PBR) proposal by NSTAR Electric d/b/a Eversource Energy, continuing incentive regulation in the state of Massachusetts. The approved plan introduced a new capital supplement known as “K-bar,” which was first implemented by distribution utilities operating under PBR in Alberta, where Christensen Associates has provided expert testimony over multiple generations of PBR. The mechanism provides additional capital support over a five year rate stay-out period using a historical trend of capital additions as a benchmark for expected capital needs over the PBR term.

Christensen Associates experts Mark Meitzen and Nick Crowley provided Eversource with the background on capital supplements, drawing on their experience in Alberta. The Christensen team also assisted with calculating the K-bar supplement. In addition, both experts conducted a total factor productivity study to support Eversource’s PBR framework through testimony filed before the Massachusetts D.P.U. The D.P.U. approved much of Eversource’s PBR proposal on November 30, 2022.