A Cost of Service (COS) study is the fundamental tool for evaluating and establishing utility rates. With industry and technology changes, utilities are expanding the scope and use of COS studies and are preparing studies that distinguish full and partial requirements customer classes. This is due to the increasing presence of distributed energy resources and/or to accommodate customers’ expectations of having more control over their usage and utility bills.
Revenue Requirements: The first step of a COS study is determining the total revenue requirement needed to pay all expenses and achieve an adequate return.
Cost of Service: The COS is aimed at identifying each rate classes cost responsibility for the revenue requirement.
Rate Design: The design and setting of utility rates is a fundamental, yet extremely important task. Rate design impacts everything from the utility’s finances to customer education and satisfaction. Learn more by clicking on “Rate Design” in the navigation box, top left.