The alphabet of PBR in electric power: Why X does not tell the whole story

Performance-based ratemaking has tended to ebb and flow in the electric distribution industry, in contrast to the telecommunications experience. The confluence of factors that precipitated the rapid embrace of incentive regulation in telecommunications likely set false expectations for electric distribution. Whereas price cap regulation in telecommunications delivered consumers real price reductions, PBR may only be able to guarantee consumers a slower rate of price growth. That makes it a tougher sell in electric distribution.