Fixing Multiyear Rate Plans

Synapse partnered with RMI to examine how multiyear rate plans (MRPs) can be designed to balance the need for ongoing grid investment with stronger utility cost-control incentives. Amid growing utility spending needs and increasing affordability concerns, MRPs offer an alternative to traditional cost-of-service regulation—one that can promote operational efficiency and financial stability when implemented effectively.

Using case studies and regulatory precedent, Synapse and RMI identified key pitfalls that weaken the cost-containment incentives in many U.S. MRPs. These include excessive utility revenues, unbalanced risk allocation between utilities and customers, and multiple cost-recovery pathways that erode accountability. The report outlines how these design flaws can undermine affordability and offers recommendations for regulators and stakeholders to recognize, avoid, and remedy them.

The full report, Fixing Multiyear Rate Plans, is available on RMI’s website.