​This report, the second of three volumes of Next-Generation Performance-Based Regulation: Emphasizing Utility Performance to Unleash Power Sector Innovation, focuses on best practices for design, development, and implementation of performance-based regulation mechanisms. It begins by laying the groundwork for understanding the incentives inherent in institutional arrangements, especially utility composition and ownership structure. It then builds on that understanding to outline best practices for the development and design of successful performance-based regulation (PBR) mechanisms. There is no “cookbook” to create a PBR mechanism, because specific jurisdictional considerations require modification and thought, but the report lists various PBR design elements that could be incorporated into specific jurisdictions.

The Next-Generation Performance-Based Regulation full report was published in 2017 as a collaboration between the National Renewable Energy Laboratory and RAP, part of the 21st Century Power Partnership initiative.​