KHA Utility Ratemaking Workshop

Participants will receive expert instruction in all facets of utility ratemaking practices, the proper role of the tariff, revenue requirements and cost-of-service determination, cost allocation principles, traditional rate design techniques as well as innovative ratemaking.  The program will progress from basic principles to advanced techniques during the course making it appropriate for everyone – from novices to managers – who interact with utility rates.  The agenda can include a rate design exercises or simulations to give hands-on application of information covered.  Although specific examples will be used, information can be conveyed in a non-utility specific format making it perfect for all utilities.

Registration Fee includes lunch and beverages throughout the day.  Participants will receive a binder of the workshop materials and information.

Below are the topics that will be covered:

Tariff and Regulation 

• Ratemaking Objectives
• Tariff as a Contract With Customers
• Terms & Conditions: Connection & Extension Policies, Billing & Collections
• Purchase Adjustment Clause
• Rate Schedules: Terms of Service, Eligibility, Applicability & Types of Customers

Developing The Cost of Service

• Ratemaking Formula
• Accounting Issues: Contrast of GAAP, FERC, Utility & Government
• Municipal Utility Rate Study versus Investor-Owned Uility Rate Case Approach
• Determining Revenue Requirements: Test Year
• Inter-Utility Allocations & Overhead
• Reserves & Contingencies
• Capital Budget, Outlays & Rate Base
• Transfers, Margins, Profit and Cost of Capital
• Typical Pro forma Adjustments

Cost Allocation

• Functional Classification of Expenses
• Cost Allocation Factors and Drivers
• Fixed vs Variable & Customer/Demand/Usage
• Average/Excess, Zero Intercept and Minimum System Peak Allocation Methods 
• Straight-Fixed Variable and Other Traditional Cost Allocation Methods

Rate Design and Pricing

• Utility Pricing Fundamentals: Rate Components
• Cost, Market, Value and Incremental Cost Based Rates
• Cost: Average and Marginal
• Price Elasticity of Demand
• Interclass subsidies: Movement to Parity
• Transportation/Wheeling vs Sales
• Interruptible vs Firm

Rate Design Simulation

• Divide into Groups
• Teams will develop Cost of Service
• Design Rates
• Will repeat for Changes in Conditions

Innovate Rate Design and Contemporary Issues

• Conservation Trends
• Revenue Decoupling
• Unbundled Rates
• Revenue Stablization
• Energy Efficiency