IMPROVING PERFORMANCE IN PUBLICLY-OWNED UTILITIES

This report by Energy Innovation outlines a three-step framework for improving the performance of publicly-owned utilities (POUs), including municipal utilities, public utility districts, and cooperatives. It emphasizes the use of performance-management practices, governance reforms, and financial restructuring to align utility operations with customer values and public policy priorities.

• POUs can implement "no regrets" actions by engaging diverse local stakeholders to define top-line goals and establishing quantifiable performance metrics. Toronto Hydro exemplified this by surveying customers, government, and academia to prioritize outcomes and using "scorecards" required by the Ontario Energy Board to track customer focus, operational effectiveness, public policy responsiveness, and financial performance.
• Integrating performance goals into Integrated Resource Plans (IRPs) allows POUs to balance competing priorities like decarbonization and affordability. Austin Energy used its "Resource, Generation, and Climate Protection Plan" to navigate a City Council mandate for 50% renewables by 2020 while attempting to keep rate increases below 2%. Similarly, CPS Energy's "Save for Tomorrow Energy Plan" (STEP) used demand-side management to avoid the estimated "$1 billion" cost of a new power plant, saving nearly 350 MW of peak demand.
• Governance reforms can improve utility responsiveness by clearly separating board-level strategic direction from executive-level operational management. The Sacramento Municipal Utility District (SMUD) implemented "Governance Process Policies" to focus the board on intended impacts rather than administrative means. Energy Northwest adopted an "Excellence in Governance" model that requires board members to undergo annual self-evaluations to hold themselves accountable for strategic clarity and meeting effectiveness.
• Revenue decoupling—separating a utility's revenue from its volumetric sales—can remove financial disincentives for energy efficiency and improve credit ratings. The Los Angeles Department of Water and Power (LADWP) and Glendale Water and Power (GWP) used this mechanism to ensure revenue stability, which a 2013 Fitch bond rating noted positively impacted LADWP’s rating.
• Performance-based compensation and the use of specialized non-profit third-party administrators can drive high efficiency. The Vermont Efficiency Investment Corporation (VEIC), a non-profit administrator, ties a portion of revenue (2-3%) to performance metrics set by the Vermont Public Service Board. This structure, which includes performance-based employee compensation, helped Vermont rank third among 50 states in overall energy efficiency performance.

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} }