Despite the growing interest by U.S. regulators and policy-makers in shareholder incentive schemes, there is relatively little empirical evidence on the challenges experienced by stakeholders during implementation. Researchers have developed economic models to inform the optimal design of efficiency policies, but a thorough review of how these policies operate in practice given institutional, political, and technical constraints is needed (Brennan, 2010, Blank and Gegax, 2011, Chu and Sappington, 2012 and Chu and Sappington, 2013). For example, Cappers et al., 2009 examined the financial impact of incentive mechanisms on shareholders and ratepayers by modeling a prototypical vertically integrated investor-owned electricity utility in the southwestern US. They found that such a mechanism could improve the utility\'s business case for BGB324 efficiency when success is measured on the basis of return on equity rather than the absolute level of earnings. They also found that incentive mechanisms that garner more of the savings for shareholders, thereby reducing the value of energy efficiency to customers, will likely be beset by fairness and equity concerns among customer stakeholders.1Satchwell et al. (2011) quantified the impacts on ratepayers and shareholders of a suite of policies, including program-cost recovery, decoupling to support fixed-cost recovery, and a shareholder return incentive. They found this combination to be a relatively low-cost resource for Arizona utility customers, providing net resource benefits and lower customer bills over the lifetime of the measures (2011–2030) compared to the “business as usual” case. The analysis also suggested that the utility faces significant erosion in earnings and a lower return on equity as more aggressive energy efficiency programs are implemented. This could be ameliorated through adjustments to program design. Although useful, these analyses do not address the full range of factors that might influence stakeholder behavior and regulatory decision-making. There is a danger that they overstate the importance of getting the quantitative settings “right” in order to secure a stable and effective policy outcome at the expense of considering such factors as earnings potential and perceptions of regulatory risk.