How to Leverage Cost Allocation to Enable Rapid, Affordable, and Equitable Electrification

This report by RMI examines how public utility commissions in Minnesota, Massachusetts, and New York use different cost allocation strategies during proactive distribution planning to balance grid investment needs with customer affordability during the electrification of buildings and transportation.

• Three US states have implemented distinct cost allocation frameworks for distribution planning: Minnesota uses standardized cost-sharing fees for large loads and DER developers with potential cost caps; Massachusetts is piloting a Proactive Hosting Capacity Fee with rate-impact caps and non-wires alternative requirements; and New York requires utilities to justify allocation choices on a project-by-project basis.
• Regulators can choose between uniform cost allocation, which distributes costs based on demand by customer class and is simple to implement but may socialize costs among non-beneficiaries, and incremental cost allocation, which assigns costs to the specific customer class that caused the need or benefits from the investment.
• Investment cost recovery can be handled through traditional allocation, where upgrades are made based on specific customer requests, or proactive allocation, where costs are recovered for upgrades intended to meet policy mandates and anticipated future load growth or DER adoption.

APA

RMI (2025). How to Leverage Cost Allocation to Enable Rapid, Affordable, and Equitable Electrification. https://rmi.org/resources/how-to-leverage-cost-allocation-to-enable-rapid-affordable-and-equitable-electrification-emerging-case-studies-from-distribution-planning-practices/

Chicago

RMI. How to Leverage Cost Allocation to Enable Rapid, Affordable, and Equitable Electrification. 2025. https://rmi.org/resources/how-to-leverage-cost-allocation-to-enable-rapid-affordable-and-equitable-electrification-emerging-case-studies-from-distribution-planning-practices/.

Wikipedia

{{cite report |author=RMI |title=How to Leverage Cost Allocation to Enable Rapid, Affordable, and Equitable Electrification |date=7 November 2025 |url=https://rmi.org/resources/how-to-leverage-cost-allocation-to-enable-rapid-affordable-and-equitable-electrification-emerging-case-studies-from-distribution-planning-practices/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025how, author = {{RMI}}, title = {{How to Leverage Cost Allocation to Enable Rapid, Affordable, and Equitable Electrification}}, institution = {RMI}, year = {2025}, month = nov, url = {https://rmi.org/resources/how-to-leverage-cost-allocation-to-enable-rapid-affordable-and-equitable-electrification-emerging-case-studies-from-distribution-planning-practices/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }