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Cost of Service Studies

Cost of Service Studies are among the basic tools of ratemaking. To ensure financial viability, a utility's retail rates must generate sufficient revenue to meet operating expenses and margin requirements. The basic objective of a cost of service analysis is to identify the cost of providing service to each rate class as a function of load and service characteristics. A cost of service study analysis can provide a useful guideline for assigning cost responsibility to each customer classification in a way that avoids unjustifiable price discrimination. A cost of service analysis also provides information useful in designing individual rate schedules and provides support for justifying rate differentials to retail customers.

PSE can provide the following cost study services:
  • Retail (distribution utility) traditional "bundled" cost of service study.
  • Retail (distribution utility) "unbundled" cost of service study identifying costs for functional components typically identified under electric utility restructuring.
  • Wholesale (generation and transmission cooperative) traditional "bundled" cost of service analysis.
  • Wholesale (generation and transmission cooperative) "unbundled" cost of service analysis.
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