Note: A webinar recorded on August 4, 2017, can be viewed here: youtu.be/sZdzGx3aGt0.\
Electric utilities today must contain costs at a time when many need to modernize aging systems and all face major changes in technologies, customer\ preferences\ and competitive pressures.
Most U.S. electric utility facilities are investor-owned, subject to rate and service regulation by state public utility commissions. Regulatory systems under which these utilities operate affect their performance and ability to meet these challenges. In this business environment,\ multiyear\ rate plans have some advantages over traditional rate regulation.
The report\ focuses on key design issues and provides case studies of the\ multiyear\ rate plan approach, applicable to both vertically integrated and restructured states. Mark Newton Lowry and Matt Makos of Pacific Energy Group Research and Jeff Deason of Berkeley Lab\ authored the report; Lisa Schwartz, Berkeley Lab, was\ project\ manager and technical editor.
The report is aimed primarily at state utility regulators and stakeholders in the state regulatory process. The\ multiyear\ rate approach also provides ideas on how to streamline oversight of public power utilities and rural electric cooperatives for their governing boards.
Two key provisions of\ multiyear\ rate plans strengthen cost containment incentives and streamline regulation:
Better utility performance can be achieved under well-designed\ multiyear\ rate plans while achieving lower regulatory costs. Benefits can be shared between utilities and their customers. But plans can be complex and involve significant changes in the regulatory system. Designing plans that stimulate utility performance without undue risk and share benefits fairly can be challenging.
This report discusses the rationale for\ multiyear\ rate plans and their usefulness under modern business conditions. It then explains critical plan design issues and challenges and presents results from numerical research that considers the extra incentive power achieved under different plan provisions. Next, the report presents several case studies of utilities that have operated under formal\ multiyear\ rate plans or, for various reasons, have stayed out of rate cases for more than a decade. These studies consider the effect of\ multiyear\ rate plans and rate case frequency on utility cost,\ reliability\ and other performance dimensions.
\
A webinar recorded on August 4, 2017, can be viewed here: youtu.be/sZdzGx3aGt0
}, }