Energy Utility Rate Setting

A Practical Guide to the Retail Rate-Setting Process for Regulated Electric and Natural Gas Utilities. Electric and natural gas utility regulation in many states still involves the traditional form of rate of return regulation. This book explains how the traditional retail rate-setting process is commonly done for electric and natural gas utilities. This process includes establishment of the annual revenue the utility requires to cover its costs, determination of the cost of serving each customer class through the use of a cost of service study and finally the design of rates. The book includes a discussion of revenue requirement, rate base, cost of capital, expenses, revenues, rate-making objectives, cost of service studies, rate design, the rate case process, tariff policies, metering, service quality, and other types of cases affecting rates. The book concludes with a numerical example showing the calculation steps from revenue requirement to rate design.