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This report by RMI examines the shift toward "climate-forward efficiency," which prioritizes energy efficiency, electrification, and demand flexibility specifically to reduce greenhouse gas (GHG) emissions. It analyzes the use of Performance Incentive Mechanisms (PIMs) to align utility business models—which traditionally favor capital investment and sales growth—with state climate goals.

This case study examines the California Risk-Reward Incentive Mechanism (RRIM), an energy efficiency shareholder incentive program, to identify challenges associated with using counterfactuals to vet utility savings claims. The document highlights how measure-by-measure estimation of savings leads to regulatory conflict, high administrative costs, and volatile incentive payments, ultimately recommending a shift toward outcome-oriented metrics.