E3: Energy+Environmental Economics
Expertise    |    Cost of Service and Rate Design
Sample Projects

With the increasing complexity of utility operations, it is more important than ever to apply skilled modeling techniques to cost of service studies in order to ensure that utility rates continue to reflect cost causation and equity principles. At the same time, policy goals are providing pressure to develop new rate structures, such as time-of-use pricing or inclining rate structures that reward customers for better managing their energy consumption. E3 has decades of experience assisting utilities in the core functions of traditional cost-of-service analysis and retail rate design. In addition, E3 has been at the forefront of advanced analysis such as marginal costing, designing innovative rates, and analyzing complex issues such as the effects of net metering for distributed generation facilities.

E3 provides services such as:

  • Cost-of-service analysis (COSA) and revenue allocation
  • Cost of capital analysis
  • Retail rate design
  • Time-and-area specific marginal costing
  • Bill impact analysis
  • Time-of-use pricing
  • Pre-paid billing options
  • Inclining block and two-part retail rate designs
  • Rate designs for producer-consumers
  • Net energy metering benefit/cost analysis
  • Expert witness testimony
Contact: Brian Horii or Ren Orans

Net Energy Metering Cost-Effectiveness Evaluation. The California PUC engaged E3 to determine the level of subsidy to Net Energy Metering (NEM) participants, given lost revenues from NEM bill credits and utility avoided costs resulting from NEM generation.

BC Hydro’s Suite of Conservation Rate Structures. E3 helped BC Hydro develop a suite of new conservation-focused rate designs, including a two-part design with individual customer baselines to mitigate bill impacts to large industrial customers while providing a marginal-cost based pricing signal.

Hawaiian Electric Light Company Retail Rate Design. E3 developed a three-tier inverted block rate structure designed to both encourage investments in efficiency for large residential energy consumers while protecting smaller users from rate increases.

Umatilla Electric Cooperative COSA and Rate Design. E3 developed a cost of service analysis and new inclining block retail rate designs for Umatilla Electric Cooperative, a 200 MW rural electric cooperative in Northeastern Oregon.

Lower Valley Energy Retail Rate Design. E3 designed rates and prepared testimony and supporting filing materials for Lower Valley Energy, a 120 MW rural cooperative utility serving Jackson Hole and Star Valley, Wyoming. The utility adopted E3's recommendation to eliminate declining block rate structures.