IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES

The report outlines a three-step approach for improving the performance of publicly-owned utilities (POUs). The first step involves 'no regrets' actions, such as engaging diverse stakeholders to define goals and using Integrated Resource Plans (IRPs) to balance reliability, cost, and environmental targets. The second step focuses on governance evolutions, specifically delineating the roles of boards and management and implementing board self-evaluations. The third step suggests more drastic measures for lagging performance, including revenue decoupling to support energy efficiency, performance-based employee compensation, and the use of third-party non-profit entities for specific utility functions.

• Publicly-owned utilities can improve transparency and align management with local priorities by surveying diverse stakeholders to define top-line goals and reporting progress through standardized public 'scorecards'. Toronto Hydro implemented this by surveying customers, government, and academia, and reporting on customer focus, operational effectiveness, public policy responsiveness, and financial performance.
• Integrated Resource Planning (IRP) allows POUs to balance competing goals such as decarbonization and affordability. Austin Energy used its 'Resource, Generation, and Climate Protection Plan' to find a compromise between a 50 percent renewable energy goal for 2020 and a City Council mandate to keep annual rate increases below two percent.
• Demand-side management can be used within an IRP to avoid expensive supply-side investments. CPS Energy's 'Save for Tomorrow Energy Plan' (STEP) aimed to save enough energy to delay the construction of a new power plant estimated to cost over $1 billion, ultimately saving almost 350 MW of peak demand.
• Governance performance can be improved by clearly separating the board's role in setting high-level outcomes from the management's role in operational execution. The Sacramento Municipal Utility District (SMUD) adopted 'Governance Process Policies' to focus the board on intended impacts rather than administrative means, which contributed to SMUD becoming California's top-rated electric utility in customer satisfaction.
• Board excellence can be driven by implementing self-evaluation models where board members are held accountable for their own performance. Energy Northwest's 'Excellence in Governance' model requires the board to assess whether it adhered to commitments and focused on the correct strategic directions.
• Revenue decoupling—separating utility revenue from volumetric sales—removes the financial disincentive for energy efficiency and improves financial stability. The Los Angeles Department of Water and Power (LADWP) and Glendale Water and Power (GWP) used this mechanism to maintain credit ratings and support efficiency programs.
• Performance-based compensation and the use of specialized non-profit administrators can drive industry-leading energy efficiency. The Vermont Efficiency Investment Corporation (VEIC) ties a portion of revenue (up to 3 percent) to quantitative performance indicators, resulting in a return of $2.60 for every dollar invested in efficiency as of 2014.

APA

O’BOYLE, M., & AGGARWAL, S. (2015). IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES. Energy Innovation. https://energyinnovation.org/wp-content/uploads/ImprovingPerformancePubliclyOwnedUtilities-1.pdf

Chicago

O’BOYLE, MICHAEL, and SONIA AGGARWAL. IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES. Energy Innovation, 2015. https://energyinnovation.org/wp-content/uploads/ImprovingPerformancePubliclyOwnedUtilities-1.pdf.

Wikipedia

{{cite report |last1=O’BOYLE |first1=MICHAEL |last2=AGGARWAL |first2=SONIA |title=IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES |publisher=Energy Innovation |date=November 2015 |url=https://energyinnovation.org/wp-content/uploads/ImprovingPerformancePubliclyOwnedUtilities-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oboyle2015improving, author = {O’BOYLE, MICHAEL and AGGARWAL, SONIA}, title = {{IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES}}, institution = {Energy Innovation}, year = {2015}, month = nov, url = {https://energyinnovation.org/wp-content/uploads/ImprovingPerformancePubliclyOwnedUtilities-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }