Performance-based Regulation (PBR) for the Hawaiian Electric Companies (Docket No. 2018-0088)
Background | Key Orders and Filings | Key Past Events | More Information
BACKGROUND
Following a three-year investigation, the Commission established a performance-based regulation (“PBR”) Framework to govern the Hawaiian Electric Companies. This PBR Framework includes a set of alternative regulatory mechanisms encouraging the utility to focus on performance and desired outcomes, such as increasing renewable energy, lowering costs, and improving customer service.
The PBR Framework employs four types of regulatory tools: revenue adjustment mechanisms, performance mechanisms, an innovative pilot process, and safeguards. The revenue adjustment mechanisms set the utility’s target revenues for a five-year period, which are adjusted by a formula that accounts for inflation, a customer dividend, collected revenues, and extraordinary projects. The performance mechanisms include performance incentive mechanisms (“PIMs”) that provide additional revenue opportunities if the utility meets certain performance outcomes, which are supplemented by a portfolio of scorecards and reported metrics to monitor the utility’s progress. The innovative pilot process is a framework for expedited review for pilot projects to incent innovative programs and projects. The safeguards include an Earnings Sharing Mechanism (“ESM”) to protect the utility and customers from excessive earnings or losses and a re-opener mechanism in case the entire PBR Framework (or specific parts) need to be reexamined.
The PBR Framework went into effect on June 1st, 2021 for a five-year period. During this five-year period, the parties involved with developing the PBR Framework have been collaborating through the PBR Working Group on implementation and monitoring efforts, such as the development, review, and modification of PIMs. In the final years of the five-year period, the Commission and the parties shall review the PBR Framework to determine appropriate modifications for the next iteration of the PBR Framework.
KEY ORDERS AND FILINGS
| Date | Link | Summary |
|---|---|---|
| April 4, 2025 | Order No. 41639 | The Commission established a briefing schedule for Phase 5 of the PBR Framework review. Parties are to submit evaluations of Hawaiian Electric’s performance under PBR during MRP1 and recommend which PBR mechanisms should be considered for modification in Phase 6. Opening briefs are due May 5, 2025, with replies due by May 19, 2025. |
| February 27, 2025 | Order No. 41575 | The Commission addressed Hawaiian Electric’s request to rebase target revenues for Maui Electric and Hawaii Electric Light under the PBR Framework. The Commission approved the rebasing for Maui Electric but deferred a decision on Hawaii Electric Light pending further review of baseline revenues and supporting data. |
| February 6, 2025 | Hawaiian Electric Companies’ Revised PIM Tariffs | Hawaiian Electric submitted revised Performance Incentive Mechanism (PIM) tariffs in compliance with Orders No. 41256 and No. 41478. Updates include modified metrics for T&D SAIDI and SAIFI, removal of 2025 Interconnection Approval PIM targets per Order No. 40462, and confirmation of February 20, 2025 as the effective date for changes. |
| January 15, 2025 | Order No. 41478 | The Commission granted Hawaiian Electric’s motion for clarification of Order No. 41256, confirming the T&D PIM suspension period runs from January 1, 2024, to December 31, 2025, rather than starting in August 2024 as previously interpreted. |
| December 18, 2024 | Order No. 41256 | The Commission granted Hawaiian Electric’s request to partially and temporarily suspend the T&D Reliability PIMs due to wildfire mitigation impacts. The suspension applies to Wildfire Risk Circuits and excludes Public Safety Power Shutoff events from non-risk circuits. |
| November 8, 2024 | Order No. 41179 | The Commission established a briefing schedule to determine whether to re-base Hawaiian Electric’s Target Revenue for MRP2. Parties are asked to address methods, timelines, legal considerations, and whether this process should be adopted for all MRP cycles. |
| October 22, 2024 | October WG Meeting Agenda | The Commission issued the agenda for the October Working Group meeting. The session will focus on Target Revenue re-basing for MRP2 and transitioning to evaluate broader PBR mechanisms. It includes utility presentations, party updates, position clarifications, and briefing preparation. |
| October 11, 2024 | Fossil Fuel Retirement Report | Hawaiian Electric submitted its fifth Fossil Fuel Retirement Report, which maintains previous retirement timelines and emphasizes reliability, stranded cost recovery, and operational flexibility. It follows guidance from D&O No. 38429 and Order No. 41022, and aligns with the Integrated Grid Planning docket (2018-0165). |
| August 22, 2024 | August WG Meeting Agenda | The August Working Group meeting agenda focused on evaluating the need to re-base Target Revenue for MRP2, exploring options, process steps, and the interaction of Target Revenue with other PBR mechanisms. |
| July 30, 2024 | Order No. 40932 | The Commission provided further guidance on the comprehensive review of the PBR Framework. Phase 5 will evaluate the effectiveness of individual mechanisms, leading into Phase 6 for potential modifications and development. Two working groups (Revenue and Performance) will support this process. |
| July 10, 2024 | Order No. 40891 | The Commission granted the Consumer Advocate’s motion to modify the procedural schedule, extending deadlines for Statement of Position and Information Requests. The revised schedule accommodates the review of Commission IRs and aligns with parties’ agreement. |
| June 24, 2024 | Order No. 40860 | The Commission approved the Joint Proposal to maintain existing PIMs (e.g., SAIDI, SAIFI, Call Center, RPS-A, Interconnection Approval) during the PBR review process. The Order clarified these PIMs will remain in effect until modified or replaced through subsequent proceedings. |
| June 19, 2024 | Order No. 40852 | The Commission provided preliminary guidance regarding the comprehensive review of the Performance-Based Regulation Framework that will commence in the fourth year of the first Multi-Year Rate Period (MRP1), 2024-2025. The Commission outlined a tentative three-phase review structure: Phase 5 (July 2024-January 2025) will evaluate PBR mechanisms through facilitated collaborative processes to identify which can continue unmodified; Phase 6 (February-May 2025) will formally examine specific modifications through testimony and hearings; and Phase 7 (June 2026-December 2026) will address implementation details during an interim period. The Commission also indicated plans to re-align MRP2 to a calendar year cycle beginning January 2027, utilize PBR Guiding Principles developed in Phase 1 as evaluation tools, and consider re-basing Hawaiian Electric’s target revenues through either a consolidated rate case or PBR Rebasing Mechanism. |
| April 26, 2024 | Order No. 40741 | The Commission approved the stipulated procedural schedule related to Hawaiian Electric’s request to suspend the T&D Reliability PIM, enabling formal evaluation of its wildfire mitigation impacts on performance outcomes. |
| April 5, 2024 | Decision & Order No. 40702 | The Commission instructed parties to submit a proposed stipulated procedural schedule to evaluate Hawaiian Electric’s request for a temporary suspension of the T&D Reliability PIM, due to wildfire mitigation protocols impacting performance. |
| February 8, 2024 | Decision & Order No. 40590 | The Commission approved, with modifications, the procedural schedule for reviewing the proposed modifications to existing PIMs, including IRS, Call Center, AMI Utilization, and RPS-A. The revised schedule allows additional time for supplemental discovery and comments. |
| December 28, 2023 | Order No. 40477 | The Commission approved Hawaiian Electric’s request to temporarily suspend two PIMs related to transmission and distribution service reliability and the heat rate provision of the Energy Cost Recovery Clause, for Maui Electric. The temporary suspension is set for August 8, 2023 through June 30, 2024. |
| December 26, 2023 | Order No. 40462 | The Commission addressed three PIMs related to Distributed Energy Resources (“DERs”) by allowing the Interim Grid Services PIM to sunset at the end of 2023, allowing the Interconnection Approval PIM to remain effective through 2024, and continuing to examine the Long-Term DER Utilization PIM into 2024 as part of a broader PIM examination. |
| August 31, 2023 | Order No. 40222 | In light of the impacts to Hawaiian Electric’s financial condition following the wildfires in Maui in August 2023, the Commission temporarily suspended the Earnings Sharing Mechanism of the PBR Framework pending further information regarding the Companies’ response and related cost recovery efforts to the Maui wildfires. |
| October 19, 2022 | Order No. 38654 | The Commission approved Hawaiian Electric’s Innovation Pilot Framework Workplan as a foundation to begin implementing the innovative pilot process for the PBR Framework. The Innovative Pilot Process is monitored in a separate proceeding, Docket No. 2022-0212. |
| June 17, 2022 | Following the Working Group efforts to address the areas of concern set forth in the staff proposal, the Commission established three new PIMs, including the Generation Reliability PIM to incentivize reliable service, the Interconnection Requirements Study PIM to incentivize timely completion of these studies for large-scale projects, and the Conjunctive Shared Savings Mechanism to incentivize cost control over fuel and related costs. The Commission also modified and extended the existing Interim Grid Services PIM through the end of 2023. In addition to these PIMs, the Commission instructed the Companies to prepare and submit two reports: a detailed fossil fuel retirement report for plant retirements through 2026, and a functional integration plan detailing plans and progress to integrate and utilize DERs into the Companies’ operations. | |
| September 17, 2021 | Order No. 37969 | The Commission introduced a staff proposal identifying several areas of concern and proposed a new slate of PIMs to foster discussion and examination among the PBR Working Group. |
| May 17, 2021 | Decision and Order No. 37787 | The Commission established a suite of performance mechanisms, including new PIMs, scorecards, and reported metrics, and outlined next steps in the PBR Docket. The new PIMs included an Interconnection Approval PIM, a Low-to-Moderate Income Energy Efficiency PIM, and an Advanced Metering Infrastructure Utilization PIM. The scorecards and reported metrics address 11 issues: affordability, capital formation, cost control, customer engagement, customer equity, DER asset effectiveness, electrification of transportation, greenhouse gas reduction, grid investment efficiency, interconnection experience, and resilience. These are reported on Hawaiian Electric’s website. |
| March 23, 2021 | Order No. 37696 | The Commission approved tariffs to implement the various mechanisms of the PBR Framework. |
| January 15, 2021 | Order No. 37557 | The Commission granted Hawaiian Electric’s motion to reconsider portions of Order No. 37507, including the approval of an alternate proposal to determine the Customer Dividend component of the Annual Revenue Adjustment formula. |
| December 23, 2020 | Decision and Order No. 37507 | The Commission’s Phase 2 Decision & Order established the PBR Framework to govern Hawaiian Electric. This framework determines the annual revenues for Hawaiian Electric, additional revenue opportunities, the innovative pilot process, safeguards, and the process for implementing the Framework. |
| May 23, 2019 | Decision and Order No. 36326 | The Commission’s Phase 1 Decision & Order established the regulatory principles, goals, and outcomes to guide Phase 2 of the PBR investigation, identified a portfolio of PBR mechanisms for priority review, and outlined the Commission’s vision of a comprehensive PBR framework. |
| February 7, 2019 | Staff Proposal | Commission staff submitted a staff proposal for the PBR Framework to govern Hawaiian Electric, seeking the parties’ consideration and feedback. The staff proposal discussed the need for regulatory reform, regulatory goals and outcomes to guide PBR in Hawaii, a recommended PBR framework, and next steps in the process. |
| April 18, 2018 | Order No. 35411 | The Commission opened the Docket to investigate a PBR Framework to govern Hawaiian Electric. The opening order discussed cost of service regulation and performance-based regulation frameworks, the background and context for Hawaii, a preliminary scope and proposed two-phase process, and next steps for the Docket. |
KEY PAST EVENTS
| Date and Link (if available) | Description | Meeting Materials |
|---|---|---|
| April 26-27, 2022 | Phase 3 Panel Hearing | Day 1 Recording |
| September 21-23, 2020 | Phase 2 Panel Hearing | Day 1 Recording |
| August 7, 2019 | Phase 2 Workshop | Commission Presentation
Hawaiian Electric Presentation Consumer Advocate Presentation Ulupono Initiative Presentation Blue Planet Foundation Presentation |
| November 28, 2018 | Phase 1 Workshop #3 | Part 1 Recording |
| September 27, 2018 | Phase 1 Workshop #2 | Part 1 Recording |
| July 23-24, 2018 | Phase 1 Workshop #1 | Day 1 Recording |
MORE INFORMATION
To see more and view all filed documents in the docket, see Docket No. 2018-0088. Hawaiian Electric provides details on its website regarding Performance Scorecards and Metrics, as well as a brief explainer on Performance-Based Regulation.
See related Commission pages:
- PBR (Docket No. 2018-0088) – Overview of the PBR Framework
- PBR (Docket No. 2018-0088) – Process Overview
- PBR (Docket No. 2018-0088) – Monitoring Hawaiian Electric’s Progress
Updated 6/2025