Rate Analysis, Design & Recommendations
Our approach to rate studies is to apply accepted industry models to specific utility situations to determine equitable rates. While our rate design knowledge is important, we also highly value the input that utilities provide, since they are the best source of information about the individual characteristics of their utility. MRES strives to provide a thorough yet concise report and presentation that provides the governing board with the key information necessary to make sound rate decisions. A rate study performed by MRES can help your utility plan for the future by anticipating when rate changes should occur.
Many factors must be considered when setting electric rates. The comprehensive studies performed by MRES include the following components, which are all essential in the ratemaking process:
- Benchmarking with other utilities: Extensive experience allows MRES to provide useful benchmarking data in numerous areas, including cash reserves, transfers to the general fund, operations and maintenance expense levels, line loss, and rate design.
- Regional utility rate comparisons: This includes rate tables that compare different rate designs and graphs that compare rate levels for each major customer class for approximately ten area municipal utilities and investor-owned utilities.
- Demand and energy projections: Analysis of past loads along with new customers and load growth expected during the next five years.
- Power cost projections: Based on estimated purchases and costs from each generation resource.
- Five-year income and cash reserves projections: Detailed analysis of current and future costs so that utilities can better plan for rate changes.
- Cost-of-service study: This includes the costs of serving each customer class are compared with the revenues received from each class to determine if rate adjustments are necessary.
- Rate design: Rates based on future financial requirements as determined by projections and results of the cost-of-service analysis. Effective rate design can better prepare your utility for distributed energy resources by more appropriately recovering fixed costs. Special emphasis is placed on cash reserve projections when evaluating necessary rate changes.
- Rate-impact analysis: Graphs showing bills under current and proposed rates at different usage levels, plus impacts for larger commercial customers.
- Presentation of the study results to the governing board: MRES strives to provide information in a summarized and easy-to-understand manner in both the written report and in board presentations.
For more information about our electric rate studies, contact MRES at 605-338-4042 or fill out the form below.