Case Studies
Case Study - Moving customers to their cost of service? Perhaps not as straightforward as you’d like
Electric cost of service studies allocate the costs of electric service to each customer class. But, the actual rates charged to each customer class may over or under collect their cost of service. Why is that?
Case Study - Electric Utility Designs Electric Rate to Move a Large Industrial Customer to its Cost of Service
In some communities with an electric co-op or municipal utility, the electric load is dominated by a large industrial customer. As the large customer may also be a significant employer in the community, there is sometimes a hesitancy when approving needed rate increases. The oversight board may get "cold feet" at decision time and not approve the full rate increase required to recover the large customer's cost of service, leading to other customer classes subsidizing the large customer's rates.
That situation is changing, as the trend in electric ratemaking is towards more cost of service-based rates. Here’s a municipal utility’s story on how they worked closely with the customer to keep their relationship and obtain buy-in from the customer.