. The primary difference between embedded and marginal cost of service studies is the reliance on AWWA to host seminar on rate setting | WaterWorld That is, rates should be set at levels that recover a utility's costs to serve the particular customer classes. PDF Public Service Commission Cost of Service Ratemaking ... PDF CLASS B INVESTOR-O U - Texas Ratemaking Principles and Individual Wholesale Rates . Distribute cost of service and revenue requirements to customer classes 2. consider. AWWA(a) base load. 23 . Rate design - customer classes. The first step in developing cost-of-service rates is to determine the revenue require - ments. •An embedded cost-of-service study will determine the cost of serving each Cost-Based Rates customer class and allocation to recover projected expenses •60 days of current budgeted expenditures •Capital: $2M minimum in SDC Fund and 1% of original plant in Capital Reserve •Senior Debt Service Coverage above 1.5x In early 2019, we argued for this evolution in cost-of-service methodology in a white paper, and the American Water Works Association's (AWWA) Rates & Charges Committee expressed strong support for further development of the concept. Cost of Service Analysis, . The AWWA ^Principles of Water Rates, Fees, and Charges: Manual of . The Commission sets rates for interstate pipeline services in a number of proceedings. Although M1 has grown considerably in scope and Water Rates, Fees, and the Legal Environment Large Utilities (over 100,000 population served) The basis for the proposed rate past one hundred years has been cost of service. Chapter 1 provides an overview of P&C insurance ratemaking, highlighting the unique relationship between price, cost, and profit. 34 states for Electricity and 18 states for Natural Gas Delivery have some form of comprehensive alternative regulation. The . Utility regulatory commissions serve as a "proxy" for competition. These studies also support the water utility's mission. financial plannin , cost of service studies, rate design, impact fee studies, and strategic valuation services throughout the United States. Cost of service and rate design studies are necessary to assist a water utility in setting rates that are fair and equitable to its customers. Cost Allocation. Widespread in Canada, Great Britain, and other countries around . This report was prepared using the principles established by the American Water Works Association (AWWA). Non-Cost . *For firms registering 4 people or more, at the same time, EBA will provide you a group discounted registration rate of $300 per person for the 4th person and beyond. Another key component of "cost of service" in traditional ("Section 4"1) FERC ratemaking is the return on the rate base. 4 Information on How Water is Used Policy Objectives. Boost your brand with the AWWA Member Logo. In particular, Otay followed AWWA guidelines in setting Tier 2 exactly 30% higher than Tier 1, and Tier 3 at exactly 100% more than Tier 1. If utilities practice full-cost ratemaking, all of these costs are recovered through water sales, so revenue loss leads to a subsequent water rate increase, meaning custom - The study includes the following: • Development of a financial plan based on the 20 year capital plan 18 Wastewater Utility where I had responsibility for managing cost-of service 19 ratemaking, capital financing and other financial analysis and reporting functions. Since leaving Vectren in 2002 to start his own rate and regulatory consulting firm, Mr. Heid has . The American Water Works Association (AWWA) announced recently that it will host its popular Financial Management: Cost of Service Rate-Making seminar in Philadelphia, PA on April 21-23. 15 In 1994, I took a position with CH2M HILL an international project delivery - 16 company. American Water Works Association • AWWA is the largest organization of water professionals in the world • Founded in 1881 . I am a member of the American Water Works Association (AWWA), the 3 Chesapeake chapter of the American Water Works Association (CSAWWA), the . Merl Hackbart University of Kentucky Merl Hackbart is professor of finance and administration at the University of Kentucky, Also in 2001, AWWA estimated such expenditures to be $250 billion over 30 years, or an average pipe replacement cost of $6,300 per household. These are ways to move beyond the general rate cases of cost of service regulation and bring into rates future costs from investment projects and other sources. Customer Class or Class of Service - A set of customers with similar characteristics who have been grouped for the purpose of setting an applicable rate for electric service PUBLIC SERVICE COMMISSION CASE 14-M-0101 - Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision. COST OF SERVICE ISSUES . 20 In 1994, I took a position with CH2M HILL - an international project delivery 21 company. Key to this work are the many volunteer members of AWWA committees. Ratemaking for Energy Pipelines 2014With limited exceptions, an interstate transmission pipeline operator's rates are established using one of the following methodologies: The cost-of-service method requires that a pipeline operator submit cost and revenue data supporting a requested rate. cost-of-service analysis, rate design recommendations, and culminates in a recommended five-year rate schedule for the District's Canal rates. Cost-of-Service •Cost-of-service ratemaking is based upon the test year revenues and expenses as documented in the company's books. You will also receive 10 free alongside the customary functions in cost-of-service ratemaking. Almost 15 years of utility ratemaking and financial analysis Member of AWWA Rates & Charges Committee Conducted/managed over 500 utility rate and financial studies Directed annual rate studies conducted for the City since 2011 2 American Water Works Association (AWWA) and the AWWA Research Foundation (AWWARF). Marginal Cost of Service Studies 9.2. Sarah has strong skills in ratemaking methodologies, municipal acquisitions, contracts and accounting. 14 Alternatives to Traditional Cost-of-Service Ratemaking for Natural Gas Pipelines, Regulation of Negotiated Transportation Services, 74 FERC ¶ 61,076 at 61,238-242 (1996). $415. Performance-based regulation (PBR) is a popular alternative to traditional cost of service regulation (COSR) of energy utilities. Ratemaking Overview Revenue Requirement Cost Allocation. This committee also prepares the standard for water ratemaking advice, M1, Principles of Water Rates, Fees, and Charges [AWWA, 2012]). i TABLE OF CONTENTS Page 22 cost of service and rate study models on both cash flow and utility bases involving . 2 The objectives of Cost Based Ratemaking under AWWA M-1 are to establish rates that are:3 • fair and equitable • cost-based • proportion to the cost to serve each class of customer The objectives of AWWA M-1 are directly in-line with the requirements of Proposition 218. Vintaging of Costs 9.5. Cost Allocation • A class cost of service study is a study in which the total company cost of service (revenue requirement) is spread or allocated to customer classes. This three-day Seminar provides an updated lens on how to evaluate and develop financial policies and proposed rates that are cost-based and equitable. This three-day course uses time-honored strategies to teach attendees how to set cost-based and defendable rates. If the replacement cost for treatment and pumping equipment is added, the cost rises to almost $10,000 per household. An exception occurs when the charge for private fire protection serv-ice includes some attention to the value of service. Treatment of Carrying Costs During Construction 8.3. Comprehensive Alternative Ratemaking and Timely Recovery. This overview includes basic P&C insurance terms and commonly used insurance ratios. The . COST OF SERVICE ISSUES . ratemaking industry often relies on the Appendix A Methodology, which utilizes system‐wide demand data and customer billing data records that are commonly available to utilities. The goal is to set pipeline rates at a level that will allow the pipeline to earn a reasonable rate of return, providing both a reasonable return on Student. •To facilitate the use of the company's books in ratemaking, utility's are required to keep their books according to the Uniform System of Accounts ("USOA").