Typical Rate Study Steps

  1. Review Revenue Requirements
    • Define overall objectives
    • Determine rate revenue requirements
  2. COSA
    • Assignment of costs for a representative year to the user classes imposing the costs on the utility
      • Functionalization
      • Classification
      • ¬†Allocation
    • Determine the calculated cost per user class
    • Compare the cost per user class to actual revenue per user class
  3. Rate Design
    • Assess potential rate structure modifications to address any inequity between user classes
    • Consider the effect of potential changes against overall objectives
    • Evaluate sensitivity of potential Rate Design
    • Recommend rate structures designed to achieve overall revenue adequacy and support utility objectives
  4. Revenue Adequacy Evaluation
    • Project revenue requirements
    • Project revenue based on recommended rate structure
    • Evaluate financial performance over time

ratestudystep