Natural Gas Cost of Service & Rate Design
April 15-16, 2021 | Online :: Central Time
“A great class for those with beginner/intermediate experience with cost of service and rate design.” –Specialist, Michigan PSC
“Very pleasant, knowledgeable, and informative. Thoroughly understands materials.” –Office Manager, EPCOR
This two-day course is designed to explore the basic structure of cost of service applied to natural gas delivery at the state jurisdictional level. The course begins by setting cost of service and pricing questions in the context of the overall regulatory structure. Through this approach attendees are exposed to the two major approaches to cost of service: embedded and marginal cost. Applications of these approaches are taken from state rate setting proceeding with the major areas of contention among parties to regulatory proceeding highlighted. The course will also discuss the basics of rate design from a historical approach and trace the evolution of pricing as the concern over efficiency has grown and the potential for alternatives to grid-delivered energy evolve.
The course is designed in a lecture format with enough flexibility for student activities and group discussion. The intent is that participants will be able to apply the information learned the first day they return to their jobs. Hands-on activities will be included throughout the day.
- Discuss the regulation of public utilities, including the rational, duties, obligations, and evolution
- Evaluate the principles applied to pricing, the economics of natural monopoly, and pricing strategies
- Define the functionalization, classification, and allocation of embedded cost of service
- Define the purpose, planning, revenue requirements, and costs regarding marginal cost of service
- Examine the differences between traditional and modern rate design
- Review tracking mechanisms, volumetric risk, net energy metering and more topics related to rate design
Thursday, April 15, 2021 : Central Time
8:45 – 9:00 a.m.
12:30 – 1:15 p.m.
9:00 a.m. – 4:30 p.m.
Introduction and Regulation of Public Utilities
- The origin and meaning of the public utility concept
- The rationale for regulation
- The regulatory compact: duties and obligation
- The evolution of regulation and introduction of competitive markets
- Evolution of industry structure
- The revenue requirement: assumptions and principles
- Principles applied to pricing
- Economics of natural monopoly
- Foundations of public utility pricing
- Pricing strategies and special topics
Cost of Service Overview
- Basic approach of cost of service
- Marginal v. Embedded
- Pricing traditional services
Embedded Cost of Service
- Classification and allocation
- Interclass revenue allocations
Exercise: Embedded cost and interclass revenue allocation
Marginal Cost of Service
- Purpose of a marginal cost study
- Planning and marginal cost
- Customer, T&D and generation costs
- Data used in MC studies
- Reconciliation with revenue requirement and interclass revenue allocation
Friday, April 16, 2021 : Central Time
8:45 – 9:00 a.m.
12:30 – 1:15 p.m.
9:00 a.m. – 4:30 p.m.
Traditional Rate Design
- Flat rates
- Two-part and multi-part rates
- Pricing capacity and access
- Volumetric rates
- Issues in using embedded costs for unbundling rates
Modern Rate Design
- Straight-fixed variable pricing
- Modern demand-based pricing
- AMI and smart metering
- Special pricing topics: demand management, TOU rates, load retention, NGV pricing
Special Topics in Rate Design
- Tracking mechanisms
- Volumetric risk
- Net energy metering
- Standby/buyback rates
- Special contracts and economic development rates
- PBR and incentive regulation
- Utility of the future and platforms
- Revenue stabilization plans
- Multi-year ratemaking
Wrap-up and Discussion of Future Directions
Dr. Carl Peterson, Clinical Professor of Economics, University of Illinois Springfield and Executive Advisor to Concentric Energy Advisors
Carl Peterson, Ph.D, is currently Clinical Professor of Economics at the University of Illinois Springfield. Dr. Peterson was a consultant with NERA Economic Consulting (2000- 17), a senior advisor for energy policy (1996-2000), a rates economist (1994-96) at the Illinois Commerce Commission, and a staff economist at the Center for Regulatory Studies at Illinois State University (1993-94). Dr. Peterson is currently an Executive Advisor to Concentric Energy Advisors. Dr. Peterson has advised governments and private entities in Europe and the US on issues related to the regulation of public utilities since 1998. Dr. Peterson has been a program faculty member at the Institute of Public Utilities at Michigan State University and has taught economics at Illinois Central College and Eureka College. His work has appeared in The Electricity Journal, Journal of Accounting and Finance, Natural Gas and Electricity, and several edited volumes.
We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.
- IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
- You will receive a meeting invitation will include a link to join the meeting.
- Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
- You will need to join the appropriate meeting at the appropriate time.
- If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
- The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.
Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ
If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event
EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.
EUCI is authorized by IACET to offer 1.3 CEUs for this event.
Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.
Course CPE Credits: 14
There is no prerequisite for this Course.
Program field of study: Specialized Knowledge
Program Level: Beginner/Intermediate
Delivery Methood: Group-Live
Advanced Preperation: None
EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
Case studies, PowerPoint presentations and group discussion will be used in this event.
Requirements for Successful Completion of Program
Participants must be in attendance for the entirety of the course
Who Should Attend
This course is recommended for policymakers, managers, attorneys, regulators, key accounts representatives, accountants, engineers, and analysts who would like introductory, hands-on training related to cost-of-service concepts and techniques for natural gas utilities.