Power and Utilities Cost of Service and Rates
Securing your co-op/utility debt repayment for large industrial customer facilities
Industrial customers may comprise a large portion of the load and volume of your electric, gas, wastewater, and water services. They are the customers that can be economic drivers in the community. They can also be the customers that require specific services or expansion of your facilities.
How do you provide financial security for the co-op/utility and rat equity for your other ratepayers? An industrial services contract is one method that is proven to work.
Electric Rates for Electric Vehicles
Electric vehicle rates - It is possible to encourage early adoption of EVs with special rate structures and charger rebates. This article shows some actual examples of current utility programs designed around time-of-use charging rates and rebates for electric charging equipment. Consider these as you look to options for your utility or co-op.
Electric vehicle charging subscription rates? An app for that?
An electric vehicle subscription charging rate is gaining traction in the industry. That is, the same flat monthly rate paid by EV customers to charge their vehicles as much or as little as they'd like. What are the financial considerations for an EV subscription rate and the benefits to the EV customer and electric provider?
Selecting an Expert Witness for Electric Rate or Contract Disputes? Here’s some considerations
An expert witness can be one of the crucial building blocks for supporting a contract or electric rate dispute. Disputes are part of the business and an expert witness can provide strong, supportive arguments and evidence in areas where your team may not have the expertise.
FERC Accounting Report 2023 - Not just compliance, but best practices
This article discusses the 2023 FERC compliance audit report on issues from auditors. Here are areas of focus, not just for a FERC rate filing, but as best practices.
Best Practices in Electric Cost of Service Studies
Using FERC accounting drives electric cost of service studies and electric rates. Electric rates drive revenues and recover the full costs of operations, debt service, and capital additions of a utility. While most investor-owned utilities, electric cooperatives, and large municipal utilities use the “utility method” to develop electric rates, many small to mid-sized utilities base their rates on utility cash flows. What’s the difference? Does it matter? This article dives into the differences between the two methods and provides an opinion on what method would benefit your utility’s ratemaking and cost recovery.
It’s easy to cut customer electric rates, right?
A common refrain from customers is that electric bills are "too high"; just cut electricity costs! With electricity costs increasing 15% annually in 2022 and 2023 and recent proposed EPA regulations designed to phase out fossil fuel electric resources, the trend in electricity prices will continue to have upward pressures.
How easy is it to provide reliable electric service and stem the tide of increasing rates? Turns out, it's not easy at all.
Encouraging water conservation and cost of service water rates
The utility and electric co-op business model walks a fine line between encouraging customer conservation to be a steward of the environment and recovering the utility's cost of providing service to its customers. Other factors in play, such as greater efficiencies in water use in plumbing fixtures, recycled water, and smart watering, naturally drive down water use. In the electric business, reductions in electric use due to more efficient appliances, air conditioning, hearting, lighting, and computers, coupled with increase in electric use due to electric cars (just the start of that trend) leads to an interesting landscape when it comes to electric rates.
But our topic in this article is how to connect the recovery of the costs of serving water customers and reduce consumption by all customers.
Marginal cost electric rates - another option for large customers
Understanding marginal electric costs is essential for various purposes, including pricing, economic efficiency, and energy policy decisions. Marginal cost electric rates provide another option for large customers who may be pushing the limits of the electric load curve.
Time of use electric rates should be in your future
Time of use industrial rates are common in the electric industry. Residential time of use rates are becoming more common, but still have a long way to go to catch up.
What advantages can time of use rates yield for your utility or cooperative AND your customers? Here are some insights.
How do we pay our solar and wind energy providers? What’s fair?
If you’re new to the electric business, you may wonder what Distributed Energy Resources (DER) are and how they fit with the mix of energy options. DER are renewable energy power sources and continue to grow as power supply options. Due to the way they operate, there are different methods for determining how to provide compensation to DER providers.
This article is an introductory primer to some of those reimbursement methods.
AMI - the new standard in allocating overhead costs of service?
This article outlines some of the advances in cost allocation theory, basing allocations on the timing of beneficial use of overhead activities. The application benefits your utility's investment in smart metering and load-measuring technology.
Use ASC 980 or GASB 62 to Bridge the Gap Between Solar Power and Electric Budgets
ASC 980 and GASB 62 can help revenue recovery of budget misses due to unforecasted solar and renewable energy generation, from distributed energy resources (DER).
With analytical trend tools at our disposal, budgets are more realistic and numbers can be tighter. However, as your DER customers grow, their increased generation trends may not show up yet in historical sales data and not be included in budgets. This article discusses the use of ASC 980 and GASB 62 in making sure budget shortfalls are not “lost” revenues.
FERC Accounting Report 2022 Uses Data Analytics to Identify Areas for Review
This article discusses the 2022 FERC compliance audit report on issues from auditors. It can be helpful to consider this FERC view when considering items to include in electric rates or accounting approaches to take on various transactions.
Are you part owner of a power plant? Regular joint power supply contract audits will help you sleep at night
A common arrangement in the power supply process is joint ownership of power plants. Joint ownership arrangements involve two or more owners of a power plant, with one of the owners called the operator owner, who operates the power plant, bills the owners for operating costs, and all owners partake of the power supply. The joint ownership is governed by an overall power supply agreement, which designates various committees (management, operating, and finance) that are charged with the governance and management of the contract.
The contracts generally have audit provisions that allow any owner to audit billings under the contract, using their own personnel or through an independent party such as an accounting firm. Regular audits are beneficial to all owners - we’ll discuss the areas why.
Charge residential electric customers $75 per month, then add usage charges?
The monthly residential customer electric bill consists of a customer charge and a kWh charge. The monthly electric bill for a large power user consists of a kW charge and a kWh charge. Would it surprise you if the costs of the customer charge and the kW charge are two-four times more than the amount charged to the customer? The undercharged amount ends up in the kWh charge. Why is this, why does it matter, and what might you do about it? Read on, and we’ll share some schools of thought on electric ratemaking.
Electric Cost of Service Rates and Rates for New Technology - One Utility’s Approach
An electric utility recognized that it needed to increase electric rates after developing its budget for the coming year (also known as a revenue requirement). The utility had not increased rates in 5 years and wanted to take the opportunity to move customer rates towards their cost of service and to incorporate distributed energy resources (DER) and electric vehicle charging into their rate structure.
Here are the steps they took to move to cost of service rates and implement innovative rates for residential, DER, and EV customers.
Electric Rates for Solar Power and DERs
Distributed energy resources (DERs) are taking on a greater role in the energy planning process for co-ops and utilities. FERC Order 2222 and the NARUC Distributed Energy Resources Rate Design and Compensation publication discuss this trend and the recommended rate structures that are becoming industry best practices.
Cost of Homeowner Solar Power - the Costs Before the Meter
Solar power customers have a love/hate relationship with their electric provider. Before you install solar panels on your home, know the full cost of ownership.