Energy Intel 3rd Quarter 2025 | 1
3rd Quarter 2025
THE BUSINESS OF ENERGY
2 | Energy Intel 3rd Quarter 2025
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Brett Feldman, Rhode Island Energy
Elizabeth Freeman, REAP Energy
Jeff Brown, Public Service Company of Oklahoma
Katie Falk, Evergreen Consulting Group
Knox Cameron, DTE Energy (BOARD CHAIR)
Derek Okada, Energy Solutions
Liz Haworth, Michaels Energy
Pamela Fann, Impact Energy
Quinn Parker, ENCOLOR
Dena Jefferson, J.D., Franklin Energy
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Energy Intel 3rd Quarter 2025 | 3
Table of Contents
04
A Letter From Our Board Chair
By Knox W Cameron
06
Redefining Leadership: Driving Industrial Energy
Efficiency for a Sustainable Future
By Kenny Porter
10
Electrify Everything? Not Without Rethinking
Regulation
By Bill LeBlanc
18
Addressing affordability concerns head-on: How
DERs can support whole-system cost prudence
By Chris Broadhurst
24
Decarbonization Insetting and Offsetting
Strategies to Reduce Carbon Emissions
By Diana Nash
31
Decarbonize and Thrive: The Crucial Case for
Decarbonizing Water and Wastewater
By Matt Jensen and Rob Sowby
40
A Unicorn and a Pegasus Walk into a House—
This Isn’t a Joke
By Joe Nunley
47
California’s Rate Design Revolution: How the
Golden State is using Rates to Fight Soaring Energy
Bills and Energy Inequity
By Jordan Folks
52
Critical Decarbonization Barriers and
Opportunities: The Role of Automated Demand
Response in Data Centers
By Kenneth Cortell
57
From Gaps to Gains: Real‑Time Air Sealing Insights
for Next‑Generation Residential Energy Efficiency
By Sooria Narsiah
63
Advancing Dual-Fuel Residential HVAC to Achieve a
Reliable, Resilient and Affordable Energy Future
By Ryan Kerr and Aaron Winer
4 | Energy Intel 3rd Quarter 2025
A Letter From Our Board Chair
Knox W. Cameron, Director of Renewable Solutions, DTE
To the entire AESP Community,
Welcome to the Q3 edition of Energy Intel. More and more, it feels like we’re not simply in the
energy business. We’re also in the business of transformation. Markets are moving faster than
models, technologies are leaping from pilot to mainstream almost overnight, and
communities are demanding that the clean energy future be fair, not just fast. The pressure
is high, but so is the potential.
That’s why this issue’s theme, The Business of Energy, is so timely. Every step forward in
decarbonization comes down to choices: how we regulate utilities, how we price energy, how
we build a workforce, and how we connect with customers. Technology sets the stage, but
business decisions determine whether the performance soars or stumbles.
THEMES EMERGING IN Q3
Rethinking Regulation
The old cost-of-service model has served its time. It built a reliable grid, but it’s not built for
what’s coming next. Electrification is rewriting demand in ways that the old rules can’t
handle. If we keep rewarding spending instead of results, we’ll hold ourselves back. Real
progress means flipping the script and tying success to outcomes like lower bills, cleaner
power, and fairer access.
Communities as Catalysts
Some of the most important energy decisions are being made close to home, in places
like city halls, water districts, and municipal utilities. These aren’t flashy stories, but
they’re powerful ones. By weaving efficiency and decarbonization into daily operations,
communities are cutting costs, boosting resilience, and earning trust from the people
they serve.
Workforce as Infrastructure
We talk a lot about transmission lines and charging networks, but the truth is, the energy
transition can’t happen without people. Contractors, technicians, and program
implementers are the real infrastructure. Right now, the shortage of skilled workers is
one of the biggest bottlenecks we face. Building that workforce is as essential as any
capital investment.
Equity in the Economics
Energy is never just about kilowatt-hours. It’s about who pays and who benefits. Rate
structures, incentives, and program rules can either open doors or shut people out. As
costs rise and electrification accelerates, equity has to move from the margins to the center
of the conversation. Affordability isn’t an afterthought; it’s a measure of whether we’re
truly succeeding.
Energy Intel 3rd Quarter 2025 | 5
CONTENT HIGHLIGHTS
Electrify Everything? Not Without Rethinking Regulation
Bill LeBlanc shows why electrification will falter if utilities keep getting rewarded for capital
spend instead of outcomes. Performance-based regulation offers a way to spark
innovation, keep costs in check, and align utility health with the public good.
Municipal Decarbonization: Water & Wastewater Facilities
Cascade Energy highlights how San Antonio and Clifton turned overlooked water systems
into engines of savings and climate progress. Strategic energy management helped avoid
millions in costs while strengthening resilience at the community level.
A Unicorn and a Pegasus Walk into a House
Joe Nunley points out the scarcity of true home performance contractors – the “unicorns” of
the clean energy world. And when those contractors step into low-income programs,
they’re at Pegasus-level rarity. Without them, whole-home electrification stalls. Nunley’s
piece challenges us to think bigger about program design and contractor development so
every household has a path forward.
California’s Rate Design Revolution
Jordan Folks takes us inside California’s bold experiment with rate design. From income-
graduated fixed charges to electrification-friendly tariffs, the state is testing how to protect
vulnerable customers while clearing the way for widespread electrification. The rest of the
country will be watching closely.
The energy transition is not just a technical challenge. It is a test of leadership, policy,
workforce, and equity. The business of energy is everyone’s business, and our success
depends on blending technical ingenuity with bold, human-centered decisions.
Thank you for being part of this mission. By sharing your insights, your challenges, and
your successes, you are helping to shape an industry that is smarter, fairer, and stronger
with each passing quarter.
Warm Regards,
Knox W. Cameron,
Director of Renewable Solutions, DTE
6 | Energy Intel 3rd Quarter 2025
Redefining Leadership: Driving Industrial
Energy Efficiency for a Sustainable Future
By Kenny Porter
Looking back over my journey in energy efficiency, I’ve realized that the turning points in
my career rarely came from technical breakthroughs or the latest program design. Instead,
they came from conversations. Sometimes those conversations happened in unexpected
places—like during a lighting install at the Mother Cabrini Shrine, where I learned as much
from the sisters who run it as they did from me, or at a cricket match behind a Super 8, where
I connected with community members I never would have met otherwise.
These experiences reshaped how I think about leadership. Technology may drive efficiency,
but it’s people—and the way they connect—that determine whether organizations thrive.
By reframing communication as a leadership practice, not just an interpersonal skill, we can
unlock new pathways to innovation, equity, and resilience in the energy sector.
In our industry, conversations about decarbonization often revolve around technologies and
regulatory drivers. These are critical factors in making progress toward decarbonization,
but they shouldn’t be our only focus. A less obvious—yet equally important—barrier to
decarbonization is the way organizations define and practice leadership.
Too often, leadership is viewed as a position, not a practice. The people holding executive
titles are seen as the only real leaders in the room, while the rest of the organization is
expected to follow. Champions of this traditional top-down management style praise its
efficiency, but in practice, it actually creates bottlenecks, hinders innovation, and misses
opportunities to engage the organization’s front lines.
Why should we be thinking about leadership differently in the context of energy efficiency?
Right now, our industry is at a pivotal moment. On one hand, we’re facing enormous
challenges—climate urgency, tightening regulations, and decarbonization mandates. On the
other, the energy landscape is evolving at a faster pace than many organizations can keep up
with. Technologies are shifting, funding models are changing, and stakeholder expectations
around sustainability are higher than ever before. And yet, many leadership teams still treat
energy performance and carbon management as peripheral—a function of compliance, or
just a line item in the operations budget.
Companies who integrate energy performance into their leadership frameworks are gaining
a competitive edge while also fostering long-term sustainability. These are the organizations
that will stay ahead of policy shifts, attract forward-thinking talent, and respond to the market
with agility. This requires moving beyond the idea that leadership is confined to the C-suite. It
means recognizing and cultivating leadership capacity at every level of the organization.
Energy Intel 3rd Quarter 2025 | 7
I’ve identified four key tenets that allow organizations to redefine leadership
in industrial energy efficiency:
Empower All Levels of Leadership
The traditional top-down management structure means that most organizations today only
empower the few at the top to make decisions, even though those decisions affect all in
the organization. Essentially, this means the people closest to the work, from the account
managers to the field team, carry out orders without the opportunity to use their valuable
insights from the frontline.
Consider these scenarios: An opportunity to work with a new customer disappears because
the decision-maker who could approve a creative solution isn’t available for a couple of weeks.
Alternatively, an engineer in the field identifies a fix that could save thousands, only to have
it die somewhere in “the process.” Even if your organization’s leaders are well-intentioned,
they may be unwittingly participating in a system that sidelines the voices that could speed
decarbonization forward.
Instead, empowering staff at all levels to make decisions (within clear parameters) not
only removes bottlenecks, it also fosters a culture of ownership and accountability. When
departments are encouraged to operate like a small business, staff are more likely to
innovate, take initiative, and pursue solutions tailored to customer needs. This approach also
signals trust, which can be a powerful motivator for employees. An empowered workforce is
more engaged, more adaptable, and more invested in organizational success.
Develop Essential Skills Beyond Technical Expertise
Technical qualifications, along with certifications such as CEM, CLP or EEP, remain important.
But we need to go even further. The leadership we need in order to make real progress
toward decarbonization must also develop “soft” skills that aren’t taught in these courses.
Communication and strategic thinking are essential. These skills enable customer-facing
staff to translate complex technical findings into actionable steps for different audiences
and connect project outcomes to broader organizational goals. Perhaps most importantly,
clear and direct communication of lessons learned on past projects can be integrated into
future project planning, creating more efficiency in the organization. Strong communicators
can bridge the gap between engineering teams and facility operators. Strategic thinkers can
identify pathways that align technical possibilities with customer priorities.
Additionally, companies should provide training in data-driven energy management, carbon
accounting, and sustainable operations. This ensures the leaders we’ve just empowered to
make their own decisions are making well-informed choices and creating solutions that are
long-lasting for the health of the organization.
8 | Energy Intel 3rd Quarter 2025
Engage Communities as True Partners
Decarbonization is a team effort. Our communities play a central role in both the success
of programs and the credibility of the organizations delivering them. When entering a new
market or community, it’s best to cast a wide net. This includes reaching out to housing
authorities, local nonprofit organizations, community-based groups, and cultural networks.
It’s also particularly important to reach out to those parts of the community that have
historically been underserved, rather than defaulting to the loudest voices or easiest-to-reach
stakeholders. To make meaningful progress, community engagement must be genuine and
built on listening and mutual respect, not simply fulfilling a contract requirement or checking
an outreach box.
Because many in our communities are often wary of utility companies, building trust requires
consistency and a willingness to invest time before expecting results. The payoff is significant:
long-term relationships yield stronger participation, better program outcomes, and a
foundation for future collaboration. When customers feel heard and understood, they are
more likely to engage. Studies and field experience alike show that customers who interact
more frequently with their utility consistently report more positive experiences.
Recently I had a chance to work on a project for an oft-forgotten community: the incarcerated
population. Prison facilities use massive amounts of energy, but the incarcerated community
that lives in that space is rarely considered. When Colorado’s Department of Corrections came
to Michaels Energy for solutions that would better serve their facilities and community, we
jumped at the chance. By working across multiple utilities (Black Hills and Xcel Energy) we built
a customized portfolio that accounted for different energy landscapes, staff capabilities, and
operational realities. This approach showed us that leadership in energy isn’t just about the
measures you implement—it’s about how you empower teams, tailor solutions, and create
accountability at every level.
Shift from Reactive to Proactive Leadership
Many organizations still default to a reactive mode of operation, addressing issues only after
they arise. While problem-solving is an important leadership function, it is not enough for
sustained progress.
Proactive leadership means anticipating customer needs, identifying opportunities for
improvement before they are requested, and framing solutions in a way that aligns with
customer priorities. This approach transforms the relationship from one of service provider
to strategic partner. Remember: you don’t want your team’s first customer interaction to
be with an unhappy customer. Mitigate complaints by understanding the way the customer
uses your product and then offer ways to improve their experience. For instance, rather than
introducing a demand response program only when customers face high bills or operational
constraints, proactive leaders engage early, explaining the long-term benefits and positioning
it as an opportunity rather than a remedy.
Energy Intel 3rd Quarter 2025 | 9
To put these leadership principles into practice, organizations can start by asking:
• Are decision-making responsibilities clearly defined at all levels?
• Do staff have the skills to communicate effectively with both technical
and non-technical stakeholders?
• Are there intentional strategies for engaging communities beyond traditional
outreach channels?
• How often does the organization initiate contact with customers or partners
proactively rather than reactively?
Addressing these questions creates a roadmap for integrating leadership development into
broader decarbonization strategies.
Industrial decarbonization depends on technology, policy, and financing—but, it also deeply
depends on people. Organizations that redefine leadership to empower staff at every level,
expand skillsets beyond technical expertise, engage communities authentically, and lead
proactively will meet decarbonization goals faster while building organizational sustainability.
In the end, the most sophisticated technology is only as effective as the people leading its
implementation. Redefining leadership is a strategic imperative for the industrial energy
sector’s sustainable future.
Kenny Porter
Associate Director of Account Management, Michaels Energy
Kenny Porter is the Associate Director of Account Management for Michaels
Energy. In his role, he provides leadership to the Account Management team
and brings his experience and expertise to the Programs group focusing on the
outreach and delivery to multiple clients across Colorado.
Kenny has spent most of his career in Energy Efficiency. Before joining
the Michaels team in 2022, Kenny worked at CLEAResult as a direct install
coordinator in Tulsa, OK. He then received a promotion to lead the direct install
program in Denver. Kenny then moved into an outreach role that required
him to wear lots of hats from launching pilot programs to implementing retail
lighting programs and commercial and residential audits. After 7 years, Kenny joined Resource
Innovations as an Outreach Service Provider supporting large municipal customers for ComEd.
Kenny has built a strong track record in energy efficiency by helping turn complex ideas into clear,
practical solutions. He supports team growth and creates customer-focused approaches that help
programs succeed and move decarbonization forward.
10 | Energy Intel 3rd Quarter 2025
Electrify Everything?
Not Without Rethinking Regulation
By Bill LeBlanc
A Utility Model Built for Yesterday
The U.S. electricity system is in the midst of the most profound fundamental shift in 50 years,
with electrification, renewable supply, electric vehicles, battery storage and a host of other
macro-changes hitting the market. Yet the regulatory model guiding utilities remains stuck
in the mid-1900s. Utilities are often still rewarded based on building infrastructure — power
plants, substations, wires, charging stations — rather than for achieving the outcomes
society actually needs: lower costs, lower carbon, higher reliability, and equitable access to
clean energy.
This mismatch creates real costs. Consumers pay more than they should, carbon emissions
fall too slowly, and innovation stalls. Regulators spend endless hours approving specific
activities rather than steering the industry toward measurable high-level goals. The result:
a system that too often misplaces investments and misses opportunities.
The electrification wave makes the stakes even higher. Electric vehicles (EVs) have been the
fastest-growing new load on the grid, but they are far from the only one. Data centers, heat
pumps, electric water heating, induction cooking, and emerging industrial electrification will
together add demand on a scale unseen in decades. Managed wisely, these loads can improve
system efficiency, lower bills, and slash carbon. Managed poorly, they could raise costs,
exacerbate inequities, and overwhelm aging infrastructure.
The moment calls for a new regulatory compact — one that rewards utilities not for how
much they spend, but for what they deliver. Performance-based regulation (PBR) offers
exactly that pathway.
Shifting Risk and Responsibility
Traditional cost-of-service regulation makes regulators the de facto architects of utility
activities. Commissions approve line items for capital projects and programs, utilities earn
a return on those capital expenditures, and performance is judged largely on whether
spending was prudent.
PBR flips that model. Regulators set the destination; utilities choose the route. Instead of
dictating activities, regulators establish societal goals, performance metrics, and rewards.
Utilities are free to innovate, and they earn more only when they meet and exceed
long-term results.
Energy Intel 3rd Quarter 2025 | 11
This shift is profound. It transfers more responsibility — and more opportunity — to the
utility. It requires regulators to get out of the business of micromanaging programs and into
the business of setting outcomes. Done well, it aligns the financial health of the utility and its
shareholders with the wellbeing of its customers, the grid, and society as a whole.
The Societal Goals of Electrification
Any re-regulation must start with clarity about the end goals. For electrification, four pillars
consistently emerge across states and industry stakeholders:
• Grid Optimization & Cost Containment. Electrification should manage load shapes,
improve asset utilization, and defer new infrastructure, putting downward pressure
on rates.
• Carbon Reduction. Shifting end uses from fossil fuels to clean electricity is one of the
most powerful climate strategies available.
• Adoption Acceleration. EVs, heat pumps, and water heaters won’t scale fast enough
if we are in an endless loop of pilot programs and extended evaluation periods.
• Equity. Benefits of electrification must extend to all customers, including renters,
low-income households, and communities affected by pollution.
Notably, none of these goals require utilities
to spend more capital as the primary method
of achievement. But they do require utilities to
assess all of the tools at their disposal to achieve
those key societal outcomes. If they do a great
job, rewards should follow.
These goals cut across the full electrification
landscape — from EVs to heat pumps to data
centers — but that doesn’t mean regulators
must tackle everything at once. In fact, starting
with a single end use, like EVs or data centers,
can build confidence before expanding PBR
more broadly.
Performance Incentive Mechanisms: The Core of PBR
The heart of PBR lies in Performance Incentive Mechanisms (PIMs). These are metrics,
targets, and financial rewards (or penalties) tied directly to outcomes. Unlike prescriptive
rebates or program mandates, PIMs measure whether the utility achieved a goal — and let
the utility decide how.
12 | Energy Intel 3rd Quarter 2025
Here are sample PIMs across electrification sectors:
Transportation (EVs)
• Reduction in peak load growth attributable to EV charging. (Note that this doesn’t need to
be just system load, but can be localized for the distribution system.)
• Percent of EV load shifted to off-peak periods.
• Percent of EVs enrolled in managed charging programs (utility-direct or third-party).
• EV market penetration benchmarks (registrations as % of new sales).
Buildings (Data Centers, Heat Pumps, Water Heating)
• Shifts in overall heating/cooling/operational efficiency in the population.
• MWs of building electrification under flexible control.
• Carbon reduction per dollar of incentive spending.
• Comfort and bill savings for low-income households adopting heat pumps.
System-Wide
• Downward pressure on rates.
• Improvement in overall system load factor.
• Carbon intensity of marginal kilowatt-hours consumed by new electrification.
• Equitable distribution of program benefits across income levels and geographies
Why Activity-Based Regulation Falls Short
Consider a common pattern in today’s utility electrification plans. A utility offers rebates for EV
chargers or heat pumps. Customers install the equipment, the utility reports the number of
rebates issued, and regulators chalk it up as progress.
But does that guarantee off-peak charging? Or that the heat pump actually displaced gas
usage? Or that low-income households benefited? Not necessarily.
Activity-based regulation rewards the act of spending, not the act of delivering. It locks
utilities into compliance mode instead of discovery mode. By contrast, outcome-based PIMs
pay only if the intended benefits materialize — forcing utilities to innovate, test, and adapt
until they find what works.
Energy Intel 3rd Quarter 2025 | 13
EXAMPLES for
Various Degrees
of PIMs for PBR
Traditional
program/
activity oriented
Traditional plus
customer goal
Light PIM
Aggressive PIM
Societally-
beneficial
outcome-
oriented PIM
EV Charging
Management,
Minimize Rate
Increases
Caused by
Transportation
Electrification
PUC approves
program spending
for TOU rates
and managed
charging
programs,
and rebates
for charging
equipment
PUC adds goal
for number of
participants
for TOU and
managed
charging
programs
PUC sets goals for
per customer shift
in EV charging to
off peak periods,
independent of
method used,
and number
of customers
participating
Goals focus on
overall system
load shifts due to
transportation,
or kWh peak vs.
off peak, utility
determines
methods
Utilities have
rewards based
on level of cost
containment
driven by TEP
charging patterns,
including
locational
constraint
identification
Accelerating
Environmental
Improvement
PUC approves EV
charger rebates,
with uncertain
impact on EV
adoption
PUC adds target
for number of
participants in EV
charger programs
PUC sets a goal
for % of time
customers
charge in times
of high level of
renewables
Goals focus on
overall carbon
and local pollution
reduction for
EVs on utility
programs,
with the utility
incented to
influence times
for EV charging
Utilities have
rewards based
on accelerating
carbon reduction
and local
pollution beyond
set benchmarks
Accelerate EV
Adoption,
Lowering Costs
of
Transportation
for Customers
PUC approves
education
& outreach
spending to
encourage EV
adoption
PUC adds goals to
reach a minimum
# of customers
with outreach
methods
PUC/utility track
awareness and
intent to buy EVs
among customers
Goals focus
on specific EV
purchasing
metrics, including
visits to EV
purchase sites,
EV registrations,
distribution of
EVs among target
audiences
Utilities have
rewards based
upon EV adoption
compared to set
benchmarks
Table 1 provides examples of what electric transportation PBR might look like along a
spectrum of modest to advanced PIMs. Today, EV load impacts are already showing up by
stressing transformers in neighborhoods with high EV penetration. Fleet operators seeking
to transition to EVs are finding years-long waiting periods for upgrades, but different
solutions that minimize the need for upgrades are not implemented due to today’s regulatory
limitations.
A recent report titled The Utility Playbook: Turning EV Grid Risk into a $30 Billion Opportunity1
highlights exactly the downward pressure on electricity costs (compared to business as usual)
that could be achieved through intelligent control of electric vehicles. Yearly savings of $30
billion nationally is a highly significant influence on costs even for those without EVs, and this
savings is unlikely to be delivered if utilities are rewarded for capital expenditures vs. savings
through grid optimization.
14 | Energy Intel 3rd Quarter 2025
Why This Isn’t as Risky as It Sounds
Skeptics worry that PBR exposes utilities to too much uncertainty. What if EV adoption lags?
What if customers resist heat pumps? It’s easy to stick with the status quo.
The answer is to design incentives with the right balance of risk and reward:
• Upside-Only Incentives for experimental
areas (e.g., vehicle-to-grid pilots, early HPWH
enrollment). Utilities can earn bonuses for
success but aren’t penalized for failure.
• Symmetric Rewards/Penalties for established
metrics (e.g., peak load reductions
with air-conditioning, carbon intensity
improvements). Utilities share in both the
upside and downside.
• Earnings Sharing Mechanisms that cap
excessive returns (or losses) and redirect
surplus savings to ratepayers.
In other words, regulators don’t have to
hand utilities a blank check. They can
provide real financial motivation while still
protecting customers.
Dynamic Management of Electricity Demand
For decades, load management has focused on what typically causes the peak system loads,
namely air-conditioning and sometimes winter heating. Now, EVs are coming quickly into the
mix with not only their flexible timing for charging, but the future promise to provide power
back to the grid. But which end-uses should have the most attention and investment? The
answer is…we don’t know as much of this is new. However, regulators and rate cases are not
able to keep up with the pace of technological change.
Option 1: Stick with today’s regulation, and fall more behind each year as EVs, data centers,
and heat pumps are installed but not optimized to the grid of tomorrow;
Option 2: Shift to performance incentives for electrification which rewards societally
beneficial outcomes and speed to market.
With the right PIMs, utilities have strong motivation to integrate these loads into
system operations.
Energy Intel 3rd Quarter 2025 | 15
Lessons from the States
Several states offer insights into how PBR can be deployed — though most have focused on
reliability, affordability, and carbon, rather than electrification specifically.
• Hawaii: Facing the nation’s highest electricity rates, Hawaii adopted a comprehensive
PBR framework in 2020. Its PIMs include renewable integration, DER interconnection
speed, and equity targets. Key lesson: start narrow, but design for scalability.
• Minnesota: Through the E21 initiative, stakeholders designed PBR pathways for
vertically integrated utilities like Xcel. Their process shows the value of collaborative,
multi-stakeholder design rather than adversarial rate cases.
• New York: The “Reforming the Energy Vision” (REV) effort created Earnings Adjustment
Mechanisms (EAMs) tied to carbon reduction, customer engagement, and DER adoption.
It also highlighted the importance of real-time metrics rather than years-delayed program
evaluations.
The takeaway? PBR creates flexibility. It can start with a narrow electrification focus and
expand over time. States that succeed pair bold outcome goals with pragmatic guardrails.
A Practical Roadmap for Electrification PBR
For regulators considering this shift, here’s a sample stepwise approach. A collaborative
process is needed to succeed in each jurisdiction:
1. Start Narrow, but not Shallow. Pick one or two areas of focus such as EVs and data
centers. Build confidence before expanding.
2. Define Clear Goals. Anchor them in societal outcomes: lower bills, lower carbon, equity.
Capital expansion will be essential, but optimizing the capital spend is the key.
3. Design Balanced Incentives. Use upside-only rewards for new or experimental areas,
symmetric mechanisms for established ones.
4. Set Guardrails. Apply innovative methods to reward shareholders while also providing
majority benefits to all customers.
5. Engage Stakeholders. Bring utilities, consumer advocates, technology providers, and
community groups into the design process from day one.
6. Iterate Quickly. Use pilots and real-time data to refine metrics and incentives…but work
using continuous improvement methods vs. multi-year pilots and evaluations.
This roadmap doesn’t eliminate risk. But it channels risk into innovation, rather than into
traditional infrastructure spending.
16 | Energy Intel 3rd Quarter 2025
Equity: More Than Equal Access
Equity is often an afterthought in electrification plans, addressed with carve-outs for
chargers in underserved neighborhoods. But equity isn’t about equal access; it’s about
meeting actual needs.
For renters, that may mean access to portable heat pumps or flexible billing plans. For rural
households, it may mean load-shifting water heaters that reduce winter peaks. For urban
low-income communities, it may mean targeted pollution reductions from bus electrification.
Outcome-based PIMs can focus on these end results — for example:
• Reduction in specific pollutants in identified geographic areas.
• Verified bill savings for low-income heat pump participants.
• Adoption of electrification technologies by renters or multifamily households.
By rewarding utilities for delivering these outcomes, regulators can ensure equity is not just a
box checked, but a goal achieved.
The Bottom Line:
Electrification Demands Regulatory Reinvention
Electrification is not a boutique trend. It is the central force reshaping the grid for the next
three decades. EVs, heat pumps, and water heating alone could add as much demand as a
dozen new nuclear plants. Done wrong, that demand will drive up costs, deepen inequities,
and slow carbon reductions. Done right, it can lower bills, clean the air, and make the grid
more resilient.
But “done right” requires regulators to move beyond the century-old model of cost-of-service
regulation. It requires utilities to be rewarded for outcomes, not activities. And it requires
all parties — regulators, utilities, advocates, and customers — to embrace a model where
innovation and performance matter more than paperwork and prescriptive spending.
Performance-based regulation is not a panacea. But it is the best tool we have to align utility
profit motives with public policy in the electrification era. The sooner we put it to work, the
sooner we can ensure that every new kilowatt-hour of demand delivers maximum value for
customers, the grid, and the planet.
Energy Intel 3rd Quarter 2025 | 17
Bill LeBlanc
Director, Tierra Resource Consultants
Bill LeBlanc has particular expertise in EV adoption, consumer behavior,
demand-side management program design, rate design and managed
charging, design thinking, and utility strategy. He focuses on helping his utility,
government, and business clients with new product development, utility
program design and communications, market strategy, and utility thought
leadership. Bill has over 20 years of experience working for E Source, EPRI,
EV smart charging software companies, consulting firms, and PG&E, and he
has given over 50 keynote addresses at events throughout the industry. He
was named one of only seven people by the Association of Energy Services
Professionals on their list of Game Changers of the past 30 Years. He’s also had
stints at Disney, Apple, and as a stand-up comedian
1 The Utility Playbook: Turning EV Grid Risk into a $30 Billion Opportunity, ev.energy, with research support provided by The Brattle
Group, August 2025.
References:
i States Move Swiftly on Performance-Based Regulation to Achieve Policy Priorities, March 31, 2022, By Gennelle Wilson,
Cory Felder, Rachel Gold
i The electrification framework that benefits customers, the grid, and the planet, E Source white paper,
Kevin Andrews, Gabe Cuadra, Luke Currin, Steven Day, Bryan Jungers, Bill LeBlanc, Ryan Odell, Jay Stein, Tim Stout September 8, 2020.
Link https://www.esource.com/130201fytm/electrification-framework-benefits-customers-grid-and-planet
i A discussion about why time of use rates will be problematic as time progresses is included in the following article: Electric Vehicle
Rate Design: The Biggest Problem and the Greatest Opportunity, Bill LeBlanc, October 2021. Link: https://pubhtml5.com/sicr/fllb/
basic page 34.
i An emerging push for time-of-use rates sparks new debates about customer and grid impacts, Utility Dive, Jan. 28, 2019, Herman
Trabish; https://www.utilitydive.com/news/an-emerging-push-for-time-of-use-rates-sparks-new-debates-about-customer-an/545009/
i PG&E Electric Vehicle Automated Demand Response Study Report, by Opinion Dynamics, February 2022
i PG&E and General Motors Collaborate on Pilot to Reimagine Use of Electric Vehicles as Backup Power Sources for Customers
i Performance-Based Regulation (PBR): An Overview, November 15, 2021, Washington Utilities and Transportation Commission, ,
Camille Kadoch, Elaine Prause, Rick Weston.
i Earnings Adjustment Mechanisms to Support New York REV Goals Outcome Based, Program Based, and Action Based Options,
Prepared for Advanced Energy Economy Institute, March 5, 2018, Tim Woolf, Jamie Hall, Melissa Whited.
Access at: https://www.synapse-energy.com/sites/default/files/AEEI-EAM-Report-17-062.pdf
i Washington Utilities and Transportation Commission; Performance-Based Regulation (PBR): An Overview, Camille Kadoch, Senior
Associate Elaine Prause, Senior Associate Rick Weston, Principal. Link https://www.raponline.org/wp-content/uploads/2021/12/rap_
prause_kadoch_weston_wutc_pbr_2021_nov_15.pdf
i Powering Paradise: How Hawaii Is Leaving Fossil Fuels and Forging a Path to a 100% Clean Energy Economy , Dan Cross-Call, Jason
Prince, Peter Bronski, February 2020
18
Energy Intel 3rd Quarter 2025
US utilities face a mounting consumer affordability crisis that’s reshaping regulatory
relationships. With bills rising and political pressure intensifying, regulators demand one
thing: proof that utility decisions deliver consumer value.
The challenge is how
fast the system is now
evolving, and how much
of this is happening at the
grid-edge, with data from
Berkeley Labs showing
that 44% of utility capital
expenditure is now
occurring at distribution
level (Figure 1.).
DER flexibility offers a
fast, low-cost solution to
this problem, but utilities
are struggling to leverage
them at scale. A report
from ESIG has shown a
large disparity between
DER deployment - growing
40% annually – and utility
program participation
- only increasing 1.4%
annually (Figure 2.).
Regulators are taking notice. Rate case approvals now require stronger cost/benefit justification as
political pressure mounts for affordability. This pressure is flowing through to utilities' regulated
returns, with data from S&P Global showing how Return on Equity (ROE) has dipped in recent years,
in line with a drop in authorized rate increases (Figure 3.).
Addressing affordability concerns
head-on: how DERs can support whole-system
cost prudence
By Chris Broadhurst
19
Energy Intel 3rd Quarter 2025
Wherever you are, regulators will always look to protect consumers
Regulators across the US operate under one fundamental principle: protecting consumers.
The Massachusetts Department of Public Utilities’ mission is “to ensure that consumers’
rights are protected, and that utility companies are providing the most reliable service at the
lowest possible cost”. The Public Utility Commission of Texas aims to “protect customers,
foster competition, and promote high quality infrastructure.” California’s Distribution
Resources Plan (DRP) requires the California Public Utilities Commission (CPUC) to “minimize
overall system costs and maximize ratepayer benefit from investments in distributed
resources.” This consumer protection focus transcends frameworks, political cycles, and
policy trends. Regulators consistently demand evidence-based performance metrics that
withstand public scrutiny:
• Transparent data showing direct consumer benefits
• Auditable results that can proactively demonstrate prudence to regulators
• Measurable outcomes linking utility actions to consumer cost impacts
Walking the tightrope: balancing affordability and load growth
Another key challenge utilities face is demonstrating cost prudence whilst simultaneously
dealing with unprecedented levels of load growth. This makes network reinforcement a must.
But given the scale and urgency of this problem can often leave utilities questioning whether
DERs are at the scale or reliability levels needed to play a role.
The reality is, it doesn’t need to be an either/or question. By bringing DERs into the planning
and operations cycle, we can a) leverage DERs where they have the scale and reliability to
meet the grid need and b) use the availability or price of DER flexibility as a counterfactual
that can clearly justify the need for proactive grid investment where it’s needed most.
This shift in mind-set turns DERs into a grid asset. But it’s going to take more than a change
in mindset to unlock the value of DERs.
20
Energy Intel 3rd Quarter 2025
The technical and operational challenges of
integrating DERs
There are several technical and operational challenges utilities need to address to integrate
DERs into planning and operations.
Firstly, data. DER data is often siloed and spread across multiple teams and systems. From a
planning and regulatory engagement standpoint, this makes calculation of costs, consumer
benefits, and demonstration of cost-effectiveness to regulators difficult.
This data challenge also bleeds into the operational domain, creating a lack of visibility into
where DERs are located, how much capacity they can offer, or their value to consumers.
This data issue is naturally compounded by the fact that DER data isn’t typically in the
utility's control.
This disconnect creates unclear value attribution, restricting how cost-effectiveness can be
proven to regulators or consumers.
Another challenge to address is the mismatch between infrequent planning cycles and the
increasingly dynamic nature of the grid. This can create missed opportunities where the
system needs and DER capabilities aligned but hadn’t been accounted for in the plan and
so went untapped.
This planning/operations dynamic has been a problem in the UK too. There, flexibility markets
have evolved beyond simply holding DER capacity in reserve. Through real-time dispatch
markets, distributed resources are actively managed to maintain grid stability and optimize
system performance moment by moment.
This frequent coordination of DER flexibility creates dual benefits - enhanced system
reliability through active grid management and consumer value through optimized resource
utilization. The DER data captured through this coordinated approach can provide the
performance insights to inform both operational decisions and long-term planning. It reveals
how distributed resources behave and respond to different price signals.
The dynamic interplay between flexibility markets and network planning represents
a progression from static infrastructure decisions to adaptive resource optimization –
optimization that can reduce consumer costs when executed effectively.
Critical questions then emerge that directly impact consumer costs: How responsive can
customers be to sharper price signals? How much will utilities pay to procure flexibility and
when will it be available? This information helps determine where and when the next best
network upgrade should take place, creating potential savings for consumers.