With the increasing complexity of utility operations, it is more important than ever to apply skilled modeling techniques to assess cost of service. Rate design likewise faces increasing intricacy, with new policy goals providing pressure to develop new rate structures, such as rates that encourage energy conservation. With decades of experience analyzing cost of service and developing rates, E3 provides clear guidance to clients to help with general rate cases and other challenges.
E3 has experience developing electric rates that range from simple per kWh energy rates to reliability-differentiated and time-varying rate options. Some rate designs are built on embedded cost of service studies that attempt to accurately link a utility's historical costs with its primary services and functions. Other rate designs track marginal costs estimates that are area- and time-specific, thus substantially improving the connection between incremental costs and rates.
The Cost of Service and Rate Design practice includes:- Embedded Cost of Service
- Marginal Cost of Service
- Traditional Rate Design and Revenue Allocation
- Innovative Pricing Options
- Bill Impact Analysis
Contact: Ren Orans
Sample Projects +BC Hydro’s Suite of Conservation Rate Structures. E3 helped BC Hydro develop a suite of new conservation-focused rate designs. The large general service rate uses a 2-part design with a customer baseline to mitigate bill impacts while providing a marginal-cost based pricing signal. E3 provided comprehensive assistance and analyses to support development of the rate, from surveying other North American rates, to performing cluster analysis to develop customer segmentation, to calculating bill impacts and conservation effects under alternative designs.
Hawaiian Electric Light Company. E3 developed a three-tier inverted block rate structure designed to both encourage investments in efficiency for large residential energy consumers and protect smaller users from rate increases.
BC Hydro Residential Inclining Block Rate. E3 developed inclining energy block rates for BC Hydro to replace the extant flat energy rates. E3 testified for BC Hydro on rate designs and customer conservation in response to the alternate rate designs.
Umatilla Electric Cooperative. E3 developed a cost of service analysis and new retail rate design for Umatilla Electric Cooperative, a 200 MW utility located in Hermiston, Oregon. The new rate design resulted in a substantial simplification of Umatilla’s electric rates, improving customer understanding and acceptance of UEC’s rates.
