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COURSES INTRODUCTION TO COSTOFSERVICE CONCEPTS AND TECHNIQUES FOR ELECTRIC UTILITIES February 2223, 2016 Costa Mesa Marriott Costa Mesa, CA INTRODUCTION TO RATE DESIGN FOR ELECTRIC UTILITIES February

How to fill out cost-of-service and rate design

How to fill out cost-of-service and rate design:

1. Gather relevant data: Start by collecting all the necessary information, such as historical usage data, cost data, revenue requirements, and any other relevant financial or operational data. This will help in accurately assessing the costs and designing appropriate rates.
2. Identify cost components: Break down the costs into various components, such as fuel, operations and maintenance, depreciation, taxes, etc. Understand the specific cost drivers for each component and allocate them appropriately.
3. Analyze cost allocation methods: Evaluate different cost allocation methods, such as embedded cost, marginal cost, or average cost, to determine the most suitable approach for your organization. Consider factors like fairness, simplicity, and regulatory requirements while choosing the method.
4. Determine rate design options: Based on the cost allocation, explore different rate design options. This may include flat rates, tiered rates, time-of-use rates, demand charges, or any other structure that aligns with your objectives and customer preferences.
5. Consider stakeholder input: Engage with relevant stakeholders, such as customers, regulators, and industry experts, to gather feedback and understand their needs. Incorporate their input into the rate design process to ensure it is fair and meets the expectations of all parties involved.
6. Perform financial analysis: Conduct a financial analysis to assess the impact of the proposed rate design. Evaluate revenue sufficiency, cost recovery, rate stability, and affordability to ensure the rates are financially sustainable for your organization and customers.

Who needs cost-of-service and rate design?

1. Utility companies: Cost-of-service and rate design are essential for utility companies to determine the appropriate rates they charge their customers. It helps them recover their costs and ensure financial stability while providing reliable services.
2. Regulatory bodies: Regulatory bodies rely on cost-of-service and rate design to evaluate and approve utility rates. They ensure that rates are fair, reasonable, and in the best interest of consumers while considering the financial viability of the utility companies.
3. Customers: Cost-of-service and rate design ultimately impact customers as they determine the rates they pay for utility services. Customers need transparency and assurance that the rates are based on fair cost allocation and reflect their usage, preferences, and affordability.
4. Financial stakeholders: Investors, lenders, and other financial stakeholders are interested in cost-of-service and rate design as it directly affects the financial performance and stability of utility companies. They rely on accurate and well-designed rates to assess the financial health of the organization.

Overall, cost-of-service and rate design are crucial for utilities, regulatory bodies, customers, and financial stakeholders, ensuring fair and sustainable pricing for utility services.

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What is cost-of-service and rate design?

Cost-of-service is the process of determining the actual cost of providing utility services, while rate design is the process of establishing the rates that customers will pay for those services.

Who is required to file cost-of-service and rate design?

Utility companies are typically required to file cost-of-service and rate design with regulatory agencies.

How to fill out cost-of-service and rate design?

Cost-of-service and rate design forms are typically filled out by utility companies using data on operating expenses, capital costs, and revenue requirements.

What is the purpose of cost-of-service and rate design?

The purpose of cost-of-service and rate design is to ensure that utility rates are fair, reasonable, and cover the costs of providing reliable service to customers.

What information must be reported on cost-of-service and rate design?

Information such as operating expenses, capital expenditures, revenue requirements, and customer usage data must be reported on cost-of-service and rate design.