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This research paper by Energy Innovation outlines a five-step framework for state regulators to design grid modernization programs that maximize benefits for customers. The authors emphasize the use of outcome-oriented metrics across three primary goals—affordability, resilience, and environmental performance—and suggest tying utility revenue to performance against these targets to align incentives.

This white paper proposes a Performance Incentive Mechanism (PIM) to encourage utilities to prioritize peak load reduction over capital-intensive infrastructure expansion. The author recommends using an outcome-oriented metric—specifically percentage reduction in peak load—and a sloped, symmetrical compensation structure with upper and lower caps to align utility incentives with system efficiency and customer value.