Energy Law Academy Course 104

104

 



 

 

 

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Overview

In Course 104, students will learn the cost-of-service process from start to finish in detail. We will discuss the basic concepts of the ratemaking concept. Our faculty will then address the components of a regulated service provider’s revenue requirement, including rate base and operating expenses. The course will then focus on rate design, and will include sessions on cost allocation (including functionalization and classification of costs) and types of rate design.

Energy Law Academy Certificate of Achievement: Course 104 or 105 is requirement to obtain the Energy Law Academy Certificate of Achievement.

Course 104 Content

Overview of Ratemaking Process

  • Basic concepts (just and reasonable, non-discrimination, why rates are regulated and set by public service commissions)
  • Bonbright principles
  • Steps in ratemaking process
  • Steps in cost-of-service process
  • Rate design process
  • Some key terminology (rates, rate design, prices, fees, bills, formula rates)
  • Revenue Requirement Basics
  • (Rate Base x Allowed Rate of Return = Required Return) + (Operating Expenses) = Revenue Requirement

Rate Base

  • Used and useful
  • Prudency
  • Return of and on rate base (ROE / ROR)
  • Cost of debt vs. equity
  • CWIP
  • AFUDC

Revenue Requirement Components

  • Test Year (historical test year, known & measurable changes, etc.)
  • Operating expenses (O&M, A&G, etc.)
  • Exclusions (lobbying, management inefficiency, etc.)
  • Depreciation
  • Income taxes

Cost Allocation

  • Cost-of-service study
  • Functionalization of costs (generation, transmission, distribution, etc.)
  • Classification of costs (demand, energy, customer; fixed vs. variable)
  • Rate class allocation

Rate Design

  • Rate vs. rate design
  • Flat rate (energy only)
  • Two-part rate (customer / energy or energy / demand)
  • Three-part rate (energy / demand / customer)
  • Block rates
  • Declining
  • Inverted / inclining

Special Rate Provisions / Concepts

  • Minimum Bills
  • Decoupling
  • Pre-paid service
  • Demand Ratchets
  • Power Factor
  • Service Voltage
  • Standby Rates

 


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