Michigan is among the states weighing reforms to rate case planning and utility profits. Experts and stakeholders told Utility Dive what works — and what doesn’t.

At the request of Gov. Gretchen Whitmer, D, the Michigan Public Service Commission in July published a list of recommendations for the state’s legislature to tackle energy affordability issues.

The first item the commission proposed was “multi-year rate plans with performance based ratemaking” – a reform that would require changing state law.

A multi-year rate plan, sometimes referred to by its acronym, MYRP, is one of a number of approaches that fall under the umbrella of performance-based ratemaking – known by its acronym, PBR.

While the traditional way of setting rates in many states, including Michigan, ties a utility’s allowed profit to its capital expenditures, PBR links it to specific outcomes.

PBR first emerged as an alternative model in the 1980s, but lately has seen a surge in interest as electricity prices outpace inflation and public anger over utility profits grows.

A “well-designed” multi-year rate plan, or MYRP, and performance-based ratemaking, or PBR, could “deliver meaningful affordability improvements,” Michigan PSC Chair Dan Scripps said in a letter to the governor. And it can allow utilities “the capital needed to make the reliability improvements customers need and expect,” he added.

” And the state’s investor-owned utilities say some proposals may have the opposite of their intended impact.

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