Checkout
Contact Us
close
EUCI
>
Marginal Cost Analysis for Utilities

On-Demand Training:
Marginal Cost Analysis for Utilities

Recorded: May 28, 2025

Overview Agenda Instructors
Print

“This course provided invaluable insights into marginal cost analysis, equipping me with practical strategies to optimize utility operations and pricing.”

 Director of Rate Design

“Relevant and useful.”

 Regulatory Engineer, BCUC

Explore the fundamentals and advanced applications of marginal cost analysis, focusing on its role in optimizing utility operations, establishing efficient pricing, and supporting effective decision-making in the energy sector.

This course provides attendees with a comprehensive understanding of marginal costs and their application to address industry challenges, enhance operational efficiency, and align with sustainability objectives.

Key Takeaways:

  • Understand marginal costs and their critical role in pricing, policy, and resource management.
  • Learn strategies for optimizing grid resources and consider the marginal cost implications of the energy transition, including electric vehicle adoption, DER connections, and data center buildouts.
  • Analyze marginal costs across generation, transmission, and customer services, including distinctions between average, incremental, and avoided costs.
  • Examine real-world applications and case studies to gain practical insights.
  • Address challenges such as renewable integration, equitable cost allocation, and regulatory compliance.

Learning Outcomes

  • Explore how marginal cost analysis serves as a critical tool for optimizing utility operations, pricing strategies, and policy decisions.
  • Examine core marginal cost concepts, key cost distinctions, and real-world applications in utility operations, rate design, and demand-side management.
  • Assess methods for estimating marginal costs and optimizing decision-making amid market uncertainties and emerging energy technologies.
  • Evaluate the role of marginal cost concepts in optimizing energy production, managing grid resources, and addressing regulatory and reliability challenges.
  • Examine how marginal cost concepts apply to transmission, distribution, and demand-side resources, addressing efficiency, reliability, and customer-driven innovations.
  • Assess key challenges in marginal cost implementation, including renewable integration, equitable cost allocation, and regulatory considerations.

Register

This is a recorded session - no instructor interaction is available. Recordings do not qualify for continuing education credits. Recordings will expire 30 days from date of purchase and sharing, downloading or copying of the recording in any way is strictly prohibited and will result in the termination of your license.

PURCHASE THIS RECORDING:

Recording license(s)$ 895.00 each

Agenda

8:45 AM - 9:00 AM

Log In

9:00 - 9:15 AM

Welcome, Introductions, and Course Overview

  • Hear about expectations for the course, and what participants hope to learn.
  • Understanding marginal costs as a critical tool for optimizing utility operations, pricing strategies, and policy decisions.
  • How this course will help attendees address industry challenges, make informed decisions, and meet sustainability goals.
  • Overview of the agenda and key takeaways.
9:15 - 11:00 AM

Foundations of Marginal Costs: Principles, Metrics, and Real-Life Applications of Marginal Cost Concepts

This session introduces core concepts and present case studies and practical examples of marginal cost applications in utility operations.

  • Financial, accounting, and economic costs.
  • Distinctions between average and marginal costs:
    • Incremental costs and avoided costs.
    • Short-run vs. long-run marginal costs.
  • Applications of Marginal Costs
    • Cost Allocation of Revenue Requirement
    • Marginal cost pricing for rate design (e.g., TOU, electric vehicle).
    • Avoided costs of energy efficiency and demand-side management (DSM) programs.
11:00 AM - 12:00 PM

Estimation and Optimization

This session will explore methods for estimating marginal costs while addressing uncertainty in evolving energy markets.

  • Historical vs. forward-looking approaches.
  • Simulation of demand and supply, accounting for uncertainty.
  • Challenges of integrating renewables, storage, and electric vehicle markets.
12:00 - 1:00 PM

Lunch Break

1:00 - 1:15 PM

Learning Check: Brief “Quiz” and Discussion of the Morning Content

1:15 - 3:00 PM

Generation Services: Marginal Costs in Energy Production

This session will explore how marginal cost concepts are applied to optimize energy production and manage grid resources.

  • Technology considerations: Renewables, storage, and traditional options.
  • Optimization of energy and reserve costs.
  • Environmental costs and regulatory implications.
  • Commitment challenges: Start-up, no-load, and reliability costs.
3:00 - 3:15 PM

Afternoon Break

3:15 - 4:15 PM

Transmission and Distribution Services

This session will explore how marginal cost concepts are estimated for transmission and distribution resources and support demand side innovations.

Transmission and Distribution Services

  • Differentiating marginal costs by location and service.
  • Addressing energy losses, congestion, and reliability costs.
  • Capacity planning and capital challenges in the long run.

Customer Services and Demand-Side Applications

  • Incremental costs of tailored customer services.
  • Supporting DER adoption and customer participation in energy markets.
4:15 - 4:45 PM

Issues and Challenges in Marginal Cost Analysis

This session will analyze emerging challenges and policy implications for marginal cost implementation.

  • Variability and uncertainty in renewable energy integration.
  • Equitable cost allocation across customer classes.
  • Regulatory considerations, including carbon pricing and compliance
4:45 - 5:00 PM

Wrap-Up and Q&A

  • Recap of key takeaways.
  • Open discussion: Applying lessons learned in participants’ organizations.

Instructors

Mike Clark specializes in antitrust, energy, applied econometrics, data analysis, and microeconomic theory. His antitrust experience includes class action lawsuits regarding price fixing and price discrimination matters; covering industries such as animation, electrical components, wholesale & retail gasoline, and airlines. His energy experience encompasses the measurement and evaluation of residential, commercial, and industrial energy programs; including demand response programs (e.g., critical peak pricing), time-of-use rates, net energy metering, and electric vehicle rates. He has also evaluated multiple utility pilot programs that use residential smart thermostats to facilitate energy conservation and demand response. His expertise incorporates demand modeling, estimating average treatment effects, forecasting, machine learning, and managing large datasets. His research has been published in Journal of Private Enterprise.

In his free time, Mike enjoys outdoor activities such as rock-climbing, hiking, and camping.

Dr. Michael Ty Clark

Vice President

Christensen Associates

Nicholas Crowley is a network industry expert specializing in electric and gas utility regulation, with additional experience in telecommunications and railroads. Nick testifies on cost of capital and performance-based regulation issues in the United States and Canada, and his reports have been filed before regulatory authorities across North America. Nick calculates total factor productivity for gas and electric utilities and participates in the development of cost benchmarks for power systems. He assists utilities with embedded and marginal cost-based analysis to inform practical and innovative rate design. He assists in the evaluation of leading demand response programs. His research has been published in The Electricity Journal and the journal Utilities Policy.

Prior to joining CA Energy Consulting, Nick served at the Federal Energy Regulatory Commission, assisting with energy industry benchmarking, incentive regulation of oil pipelines, and evaluation of natural gas pipeline rate cases. He is a CFA charterholder.

Nicholas Crowley

Vice President

Christensen Associates

Michael Vigdor began working at Christensen Associates in 2021. He conducts econometric analysis of customer price response to residential and non-residential demand response programs, undertakes short- and long-term load forecasting, and participates in wholesale and retail rate design projects. He has also undertaken extensions of load forecasting that involve development of forecasts of electric vehicle market penetration. More generally, he contributes to the firm’s energy data management and econometric analysis in support of a variety of regulated utility assignments. Michael has also provided expert witness support in antitrust litigation cases in which he used trend-based analysis to assess alleged supply restrictions. His background includes economic and statistical work in Stata, R, and Excel.

When not at work you can find him playing basketball, reading, cooking, and traveling.

Michael Vigdor

Economist

Christensen Associates