5 Things We Learned from Analyzing More than 200 Utility Incentives

RMI's analysis of more than 200 utility PIMs reveals a strong preference for 'upside-only' reward structures over penalties, with Return on Equity (ROE) and shared savings being the most common and highest-paying designs. While utilities consistently achieve targets for percentage adder-based and equity-focused PIMs, the report suggests that targets may be set too low. Most PIMs are short-term experiments lasting two to three years, except for fuel cost-sharing and distributed energy resource mechanisms, which often lack end dates to provide regulatory certainty.

• Reward-based 'upside-only' PIMs are the most common design, while penalty-only 'downside-only' PIMs are rare. Between 2020 and 2023, no utilities in the database incurred a PIM penalty.
• ROE basis points and shared savings are the most frequent incentive structures and generate the largest payouts. In 2023, utilities earned $92 million in total PIM rewards, with $58 million (63%) coming from 12 ROE-based PIMs and $27.6 million (30%) from seven shared net benefits PIMs.
• Percentage adder-based PIMs, often used for electrification and demand flexibility, have the highest success rate, with 100% of these structures achieved in 2023. This contrasts with ROE-based PIMs, where less than half of utilities earned a reward in 2023.
• Equity-focused PIMs are among the fastest-growing emergent topics, with 21 created since 2021. All such PIMs in the jurisdictions of Colorado, New York, New Jersey, Massachusetts, Illinois, and the District of Columbia were achieved or consistently achieved based on available data.
• The majority of PIMs (84%) are short-term experiments designed to sunset after two to three years. Open-ended PIMs without end dates are primarily fuel cost risk sharing mechanisms (two-thirds of the no-end-date group) or related to non-wires alternatives and distributed energy resources.

APA

RMI (2026). 5 Things We Learned from Analyzing More than 200 Utility Incentives. https://rmi.org/resources/5-things-we-learned-from-analyzing-more-than-200-utility-incentives-2/

Chicago

RMI. 5 Things We Learned from Analyzing More than 200 Utility Incentives. 2026. https://rmi.org/resources/5-things-we-learned-from-analyzing-more-than-200-utility-incentives-2/.

Wikipedia

{{cite report |author=RMI |title=5 Things We Learned from Analyzing More than 200 Utility Incentives |date=9 February 2026 |url=https://rmi.org/resources/5-things-we-learned-from-analyzing-more-than-200-utility-incentives-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2026things, author = {{RMI}}, title = {{5 Things We Learned from Analyzing More than 200 Utility Incentives}}, institution = {RMI}, year = {2026}, month = feb, url = {https://rmi.org/resources/5-things-we-learned-from-analyzing-more-than-200-utility-incentives-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }