Evaluating ROE and Performance-Based Regulation in Virginia
In 2025, Synapse prepared a report for Clean Virginia on performance incentive mechanisms (PIMs) and their interaction with the authorized return on equity (ROE) for electric utilities in the Commonwealth. The report reviewed recent Virginia legislation that empowers the State Corporation Commission (SCC) to adjust utility ROE by up to 50 basis points (bps) based on performance metrics such as reliability, generator performance, customer service, and operating efficiency. Synapse evaluated how ROE adjustments should be designed in conjunction with PIMs to ensure utilities are appropriately incentivized to act in the public interest.
Synapse's second report described Virginia’s biennial rate review process, assessed current ratemaking practices, and identified gaps in the regulatory framework. Synapse also analyzed how multi-year rate plans (MRPs) and performance-based regulation (PBR) could improve incentives related to cost control, efficiency, and the state’s transition to renewable energy.