NewEnergyNews: ORIGINAL REPORTING: Can utilities and customers find common ground on ratemaking?

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    Wednesday, January 02, 2019

    ORIGINAL REPORTING: Can utilities and customers find common ground on ratemaking?

    As the power sector transforms, can utilities and customers find common ground on ratemaking? "Historic test years" are the norm and "future test years" are emerging, but "multiyear plans" could change everything.

    Herman K. Trabish | July 2, 2018 (Utility Dive)

    Editor’s note: The search for rates that meet both customer and utility needs is expected to accelerate in 2019.

    Few things are more contentious in the utility world than the rate a customer pays for electricity. The contention between customer advocates and utilities takes place within the confines of electric utility commission proceedings in rate cases. Those rate cases often go unobserved by the broad public. But all the headline debates and regulatory fireworks over whether to support coal and nuclear or natural gas and renewable energy largely come down to how they will affect rates. There are different ways to calculate rates. And those little-observed regulatory proceedings are beginning to reveal that how those rates are calculated can determine which power generation source is the best buy for customers.

    Rates matter to customers, but they also matter to the utility, according to ScottMadden Partner Rick Starkweather, who has advised utilities in rate case management for 20 years. The rate determines earnings, earnings are critical to financial soundness, which is critical to the utility’s credit rating and its ability to attract the investors that fund the utility's growth. And how rates are calculated can make a big difference to utilities' bottom lines. But new ways of thinking about rate design are emerging that could eliminate the basis for the contention by aligning utility and customer objectives… click here for more

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