Multi-Year Rate Plans: A Key to Energy Reliability, Affordability, and Growth

In today’s complex energy landscape, soaring demand is strained by a limited supply of reliable, always-available energy, making it challenging to ensure a resilient grid that delivers power where it’s needed, when it’s needed. Policymakers across the country are tasked with encouraging and signaling the construction of new infrastructure to address existing and future demand. The success of our national goal of energy dominance hinges on our ability to meet the growing power requirements of data centers, AI, and a manufacturing reshoring renaissance, all while keeping energy prices reasonable for consumers.

An option that best meets these challenges and keeps energy reliable and affordable for electric customers is a regulatory mechanism known as multi-year rate plans (MYRP). An MYRP is an alternative regulatory framework in which electric distribution rates are set for multiple years—typically 3 to 5 years—instead of being adjusted annually through traditional rate cases.

MYRPs often include investment and spending forecasts, performance-based incentives, and adjustment mechanisms to protect customers’ wallets while encouraging reasonable and prudent energy infrastructure investments. More precisely, an MYRP establishes electric rates for multiple years, streamlining the regulatory process to get necessary infrastructure projects on the grid sooner. MYRPs also provide transparency into the financial conditions and earnings of electric distribution utilities.

Several states, including Florida, North Carolina, North Dakota, Minnesota, Louisiana, and others, have adopted some version of multi-year rate plans because the model promotes regulatory efficiency through reduced administrative costs and added predictability—both of which ultimately benefit customers who can count on MYRPs to offer a clearer picture of what their electric distribution utility is doing for them and on what timeframe. 

Given the benefits that MYRPs provide across the board, including leveling of electricity rates, financial transparency, customer protections, and required regulatory filings, more states should consider multi-year rate plans as a viable option to drive grid investments in support of our national energy dominance strategy.