Earnings Adjustment Mechanisms
This article is one of a series on the major components of our upstate NY rate case
Included in the upstate New York rate case is a new set of upside-only performance incentives called Earnings Adjustment Mechanisms, or EAMs. Developed in cooperation with Department of Public Service staff and other stakeholders, EAMs provide incentives for National Grid to achieve important efficiencies in our electricity and natural gas operations that benefit customers and support New York’s clean energy goals.
There are four EAMs for electric with a total of eight metrics, and one EAM for gas with one metric. Each metric contains targets that are set at minimum, midpoint and maximum performance levels. If any of those performance levels is achieved in a calendar year, National Grid can earn an annual pre-tax positive revenue adjustment. If the company achieves the maximum level for all metrics, up to approximately $68 million could be earned over three years.
The EAMs’ goals are focused on:
- Reducing electricity demand during the New York Independent System Operator peak.
- Expanding adoption of distributed energy resources.
- Improving processes to increase developer satisfaction with distributed generation interconnections.
- Incremental energy efficiency above current targets for both electricity and natural gas customers.
- Increasing LED street lighting conversions.
- Decreasing residential and commercial energy intensity by reducing total customer usage of electricity and/or natural gas on a per customer basis.
- Increasing environmentally beneficial electrification through adoption of electric vehicles and electric heat pumps that displace fossil fuel technologies.
The company will track and report results on a calendar year basis, beginning Jan. 1, 2018.
UNY Rate Case series: