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NARUC UTILITY RATE SCHOOL
TOPICS COVERED AT RATE SCHOOL
INDUSTRY CHARACTERISTICS AND REGULATORY ISSUES
- Affordability, efficiency and conservation
- Safe Drinking Water Act, security, and other cost impacts
- Public/private partnerships, ownership and size issues
- Corporate governance and Sarbanes-Oxley
- Issues in energy regulation
- Innovative regulatory ratemaking techniques
LEGAL FRAMEWORK OF UTILITY REGULATION
- Key historical cases and precedents
- Current legal issues
- Relationship between regulatory law and the economics of rate setting
- Legal basis for regulating a utility's cost of capital
BASICS OF RATESETTING
- Basic components of the revenue requirement - the cost of providing service
- Role of revenues, expenses and investments
- Basic understanding of balance sheets and income statements as sources of financial data
- Introduction to rate setting terminology
- How to choose the test year for ratemaking purposes
INCOME STATEMENT CONSIDERATIONS
- Categorization and normalization of expenses
- Key tax terms
- Flow-through vs. normalization
- Deferred taxes and investment tax credits
DEVELOPING RATE BASE
- Implication of test-year for rate base
- Utility plant in service
- AFUDC and CWIP
- Other non-plant elements of rate base
CAPITAL STRUCTURE, COST OF CAPITAL, AND RATE OF RETURN
- Composition of a utility's capital structure - debt and equity
- Explanation of fundamental cost of capital terms
- Utility shareholder risk
- Determining cost of equity using discounted cash flow, comparable earnings, and risk-premium methods
COST ALLOCATION AND RATE DESIGN
- Basic principles and goals of rate design
- Allocation of costs to functional components
- Allocation of functional components to customer classes
- Types of rates - uniform, block, marginal-cost, etc.
- Minimum bills vs. service charges
- Special-purpose rate methods
MOCK RATE DISCUSSION
- The rate hearing process at work
- Adjustments proposed by staff and utility witnesses in rate cases
- Testimony of staff and utility witnesses as they support their cases in hearing
NARUC Utility Rate School
RATE SCHOOL ARCHIVES
WHAT PEOPLE ARE SAYING...
- "All the speakers have been great and very helpful!"
- "I really enjoyed the Mock Rate Case...this portion of the school provided insight into the mechanics of what we have been learning all week long."
- "The speakers were engaging and personable, making for spirited teaching. Kudos!"
- "I felt that the school was a tremendous learning experience for me, especially as a new Commissioner. The interaction with staff and other participants was extremely beneficial … a totally worthwhile experience."
- "The Rate School is not just about learning the mechanics of ratemaking, but, more importantly, gives attendees an opportunity to understand the perspectives of the various players involved in setting utility rates. The effective mix of presentations by expert speakers and the use of group exercises resulted in an outstanding learning experience."
- “Being a lawyer and big picture policy driven, it was great to attend the rate school to see how the nuts and bolts work and see the interaction of policy makers with technical staff. It was a great experience with strong, confident and renowned faculty. All policy advisors or policy makers should attend.”
- "I want to thank you for making the conference a top rate learning experience. I will be attending the first week of Camp NARUC so I'll have another opportunity to gain insights from your experience."
SEND US FEEDBACK!
Please send us your feedback about a past IPU program or your ideas for a future program at ipu@msu.edu [mailto]