Electric Utility Pricing - Trends in Cost Recovery
July 24-25, 2024 | Denver, CO or Virtual
Click Here to register $1495
If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for seven days after the event
“Very helpful class to a new rate designer! Important to understand as our industry is facing very challenging times.” Rate Specialist, Alabama Power Company
“Excellent overview of how rates are designed and the many political and economic factors that go into them.” Budget & Rates Analyst, Great River Energy
“The course was very informative and very relevant to the rate design professionals.” Rate and Business Consultant, NRUCFC
“Awesome course for novices and experienced rate-designers. Speakers were knowledgeable and knew their material.” Senior Regulatory Accountant, National Rural Utilities Cooperative Finance Corporation
“The EUCI Rate Design workshop helped me understand the wide array of rate design options we can bring to our customers. I look forward to the next rate case and incorporating these new rate designs for our customers.” Regulatory Affairs Analyst, Indianapolis Power & Light
Building upon information discussed and developed in the Introduction to Cost-of-Service Concepts and Techniques for Electric Utilities course, this two-day course will introduce rate design concepts to participants. Our instructors will discuss:
- General ratemaking and regulatory principles
- Current trends in utility pricing
- Traditional rate design
- Unbundled rate design
- Marginal cost pricing
- Time based rates and demand management
- Special rate provisions
Each participant will work through sample rate design exercises during the course and training materials will be provided.
Learning Outcomes
- Discuss pricing interface and implications of risk
- Examine how to develop cost curves
- Review classroom exercises on developing cost curves, solar installation, and designing bundled rates
- List ratemaking guidelines
- Identify special rate provisions
Recommended Background And Requirements
No prior rate design experience is required, although knowledge of utility system infrastructure, business environment, and operations will be helpful. To participate in model development, a laptop computer with Microsoft Excel 2003 or later is required.
Agenda
WEDNESDAY, JULY 24, 2024
8:30 a.m. – 4:00 p.m. : MOUNTAIN TIME
Short breaks will be taken throughout the course (30 minutes total)
Course Overview and Introduction
- Introduction
- Building on cost-of-service
- Overlap
- Background and requirements
- Instructors
- The process
General Ratemaking and Regulatory Principles
- Introduction
- Bonbright principles
- Regulations
- Factors
- Objectives
- Ratemaking guidelines
- Factors
- Rate adjustments
- Competing objectives
- Equity
- Rate levels
- Social engineering
- Competition
- Simplicity
Electric Utility Pricing: Trends That Matter
- Fundamental trends affecting electric utility pricing
- Global changes
- Utility environment
- Advanced metering infrastructure
- Customer environment
- Pricing interface
- Pricing implications of risk
- Transactional risk/decoupling
- Risk management strategies
- Pricing strategies
Morning Break
Electric Utility Pricing: Trends That Matter (Continued)
- Storage
- Solar rate considerations/value of solar
- Classroom exercise No. 1: special rate design – solar installation
Lunch Break
Applying Cost-of-Service Results
- Cost-of-service overview
- Developing cost curves
- Bundled embedded cost
- Unbundled embedded cost
- Marginal cost
- Evaluation of competitive alternatives
- Classroom exercise No. 2: developing cost curves
Afternoon Break
Traditional Rate Design
- Rate overview
- Flat rate (energy only)
- Two-part rate (customer/energy or energy/demand)
- Three-part rate (energy/demand/customer)
- Blocked rates
- Declining
- Inverted/inclining
- Wright rate
- Relationship between rate design and cost curves
- Classroom exercise No. 3: designing bundled rates
Unbundled Rate Design
- Unbundled rate overview
- Traditional bundled vs. unbundled
- Unbundling strategies
THURSDAY, JULY 25, 2024
8:30 a.m. – 4:00 p.m. : MOUNTAIN TIME
Short breaks will be taken throughout the course (30 minutes total)
Marginal Cost Pricing
- Resources
- Application and use
- Short run and long run
- Marginal capacity costs
- Production cost modeling
- Marginal energy costs
- Marginal transmission costs
- Revenue reconciliation
- Dilemma of reconciliation
Time Based Rates and Demand Management
- Review of EPAct 2005
- Time‐of‐use overview
- Real time pricing
- Critical peak pricing
- Load reduction credits
- Other approaches
- Smart metering
- Time‐of‐use
- Seasonal
- Daily/hourly
- Cost differentials
- Variations
- ATTACHMENT: Examples of rate design 8‐1 through 8‐6
- Designing time‐of‐use rate
- Time periods
- Cost differentials
- Price elasticity
- Changes – Class load characteristics
- Changes – Revenue
- Changes – Time related costs
- Rate level adjustments
- Demand management
Morning Break
Special Rate Provisions
- Minimum bills
- Demand ratchets
- Power factor
- Service voltage
- Paying for growth
- Customer ownership of facilities
- Energy cost adjustment charges
- Net metering
- Standby rates
- Feed‐in tariffs
- Special contracts
- Others
Lunch Break
Classroom Exercise No. 4a – Residential Rate Design
Afternoon Break
Classroom Exercise No. 4b – Commercial Rate Design
Interclass Transitions and Communicating the Plan
- Introduction
- Rate Form Transition Problems
- Promotional and Special Rates
- Communicating the Plan
- Confidence in Data
- Summarize Process
- Known and Measurable Changes to Test Year
- Do Not Hide Facts
- Example Graphs
- Communications Summary
Course Wrap-Up