Ratemaking: Fundamentals of Tariffs and Cost of Service (July 31 – August 4,2017)

Course Offering:

Dates:July 31 – August 4, 2017

Location: Washington, DC

Tuition: $3,750

Code: 2727-WA

CEUs: 3.00




Although ratemaking has evolved into a complex science involving many useful and creative methodologies, the essence of tariff design is a thorough understanding of how to establish a revenue requirement for a regulated utility, how to translate that overall revenue requirement into a rate design that customers will pay, and how to use a cost of service study that will aid participants in translating the former into the latter. Accomplishing this requires an understanding of how to determine reasonable investments and costs in providing service.

This course, designed by the Institute for Public-Private Partnerships, A Tetra Tech Company (IP3), will review various ways to design tariffs over a week-long period. Case studies will demonstrate how regulated service providers and their regulators have used Cost of Service Studies and other methodologies to design effective tariffs.

Participants will work in groups to develop a revenue requirement and design tariffs based on a hypothetical set of facts. Participants will also see an example of a Cost of Service Study and its uses and limitations. The course will conclude by having participants play the roles of regulators, service providers and other stakeholders in a “mock rate hearing”.


Learning Outcomes:

  • Setting a revenue requirement.
  • Translating a revenue requirement into a tariff design.
  • Understanding the role of a Cost of Service Study in translating a revenue requirement into a rate design.
  • Analyzing the role of the regulator in the tariff-setting process, methodologies, and relationships with service providers.
  • Determining the role of the service provider in collecting and analyzing data to reduce costs and improve service.
  • Comparing case study experiences on how to determine and adjust prices and the implications.
  • Decoupling tariff policies from social and political objectives.
  • Calculating, analyzing, and adjusting tariff structures.