Alternative Regulation (Vermont)
Last modified on February 12, 2015.
|Name||Alternative Regulation (Vermont)|
|Policy Category||Other Policy|
|Policy Type||Generating Facility Rate-Making|
|Affected Technologies||Biomass/Biogas, Coal with CCS, Concentrating Solar Power, Energy Storage, Fuel Cells, Geothermal Electric, Hydroelectric, Hydroelectric (Small), Natural Gas, Nuclear, Solar Photovoltaics, Wind energy|
Utility regulators, including the Public Service Board, have applied a new type of regulation, often called "alternative regulation" or "incentive regulation." There are many variants of this type of regulation, but the common foundation is that rates are set differently from the traditional cost-of-service approach. Sometimes there is a performance-based aspect to rate-setting so that a utility is allowed to earn a larger profit if it meets certain performance goals or increases its efficiency. Other times a utility is allowed to automatically change certain aspects of its rates, without a full-scale review of all its costs (as would occur under a typical cost-of-service review). Sometimes this type of regulation "guarantees" a utility a certain amount of revenue or profit, or it provides a utility with greater flexibility to offer new services. Alternative regulation is generally approved for a specified number of years, after which time it is revisited by the utility and the regulators.