Performance-based regulation (PBR) is a regulatory framework that attempts to align the behavior and financial interests of regulated utilities with public interest objectives and consumer benefits. It does so by rewarding utilities for achieving well-defined performance metrics (outputs), as opposed to providing incentives related primarily to capital investment (inputs).

This paper summarizes the collective thinking of an industry-based Working Group, facilitated by AEE Institute, that met over several months to develop recommendations regarding the potential for PBR in Pennsylvania.