awwa cost of service ratemaking

You will also receive 10 free Sarah has strong skills in ratemaking methodologies, municipal acquisitions, contracts and accounting. Prices (rates) should be "just and reasonable" and should cover the costs of providing "safe and adequate" service. Cost-of-Service •Cost-of-service ratemaking is based upon the test year revenues and expenses as documented in the company's books. Cost Allocation. ratemaking industry often relies on the Appendix A Methodology, which utilizes system‐wide demand data and customer billing data records that are commonly available to utilities. PDF c• Although M1 has grown considerably in scope and 3 General Ratemaking Principles When a utility has monopoly market power, its prices, earnings and service should be regulated to protect captive customers. No one ratemaking pro-cedure for private fire . Financial management, capital finance planning, and rate setting have become critical tasks that demand reliable financial tools. Under cost-of-service ratemaking, rates are designed based on a pipeline's cost of providing service including an opportunity for the pipeline to earn a reasonable return on its investment. An exception occurs when the charge for private fire protection serv-ice includes some attention to the value of service. •To facilitate the use of the company's books in ratemaking, utility's are required to keep their books according to the Uniform System of Accounts ("USOA"). In particular, Otay followed AWWA guidelines in setting Tier 2 exactly 30% higher than Tier 1, and Tier 3 at exactly 100% more than Tier 1. Summary: The Revenue Requirement 9. . PDF New Foreword - Pennsylvania Public Utility Commission PDF Water Rate Study Financial Management: Cost of Service Rate-Making Seminar ... Cost of Service Rate-Making Seminar — PRW&EA AWWA Seminar Financial Management: Cost Of Service Rate-Making A class cost of service study is a study in which the total company cost of service (revenue requirement) is spread or allocated to customer classes. COST OF SERVICE ISSUES . The PSC ratemaking process. Performance-based regulation (PBR) is a popular alternative to traditional cost of service regulation (COSR) of energy utilities. Metro Consulting Associates (MCA), a multifaceted energy, land, and community development firm, today announced that President Damon L. Garrett, PE, joins a group of expert panelists assembled by the Michigan Section of the American Water Works Association (MI-AWWA) as part of their water affordability education series.Garrett will share his expertise on public engagement as it relates to . Financial management, capital finance planning, and rate setting have become critical tasks that demand reliable financial tools. American Water Works Association ("AWWA ")Rates and Charges Committee; The primary difference between embedded and marginal cost of service studies is the reliance on Adequate Water Rates Are Essential | WQP Costs should be assigned to the "cost causers." For regulated water utilities, cost of service ratemaking generally requires rates sufficient to recover reason- The rate study also address requirements under . Mutli-Registration Discount (4th person and beyond) $300. Cost of service ratemaking designs rates such that users pay through water or wastewater rates the costs they impose on the utility. $100. Service Provider Members in good standing may use the logo to demonstrate their ongoing commitment to the water industry with AWWA Membership. Fundamentals of Rate Regulation: Allocation of Costs to Customer Classes.. 61 9.1. Ratemaking Principles and Individual Wholesale Rates . Fifth Edition. Available in print or CD-ROM. Marginal Cost of Service Studies 9.2. Financial Management: Cost of Service Rate-Making Seminar September 17, 2014 @ 8:00 am - September 19, 2014 @ 5:00 pm « Alliance of Indiana Rural Water Fall Program Price-level, or "price-cap," regulation offers an alluring alternative to the traditional technique of monitoring a regulated firm's profits. the Commission is studying whether traditional cost -of-service ratemaking, is the best way to set rates for pipeline services in th e future. 23 . $140. On April 21-23, AWWA will host the Financial Management: Cost of Service Rate-Making seminar. This methodology also addresses requirements under Proposition 218 that rates not exceed the cost of providing the service and be proportionate to the cost of providing service for all customers. Boost your brand with the AWWA Member Logo. Cost of service and rate design studies are necessary to assist a water utility in setting rates that are fair and equitable to its customers. COST OF SERVICE ISSUES . Another key component of "cost of service" in traditional ("Section 4"1) FERC ratemaking is the return on the rate base. This overview includes basic P&C insurance terms and commonly used insurance ratios. I am a member of the American Water Works Association (AWWA), the 3 Chesapeake chapter of the American Water Works Association (CSAWWA), the . Vintaging of Costs 9.5. merely followed a ratemaking manual in setting rates based on non-cost objectives such as conservation and ability to pay. Ratemaking for Energy Pipelines 2014With limited exceptions, an interstate transmission pipeline operator's rates are established using one of the following methodologies: The cost-of-service method requires that a pipeline operator submit cost and revenue data supporting a requested rate. Student. Cost of Service Analysis, . AWWA's policy statements are brief statements on protecting and improving water supply, water quality, management, and the interests of . As articulated in AWWA's Manual M1, the framework that defines cost-of-service ratemaking principles focuses on meeting a community's average use, peak demands, total water volume needs, and fire flow requirements. Chapter 1 provides an overview of P&C insurance ratemaking, highlighting the unique relationship between price, cost, and profit. Almost 15 years of utility ratemaking and financial analysis Member of AWWA Rates & Charges Committee Conducted/managed over 500 utility rate and financial studies Directed annual rate studies conducted for the City since 2011 2 Distribute cost of service and revenue requirements to customer classes 2. Non-Cost . Ratemaking Process The Ratemaking Formula and Basic Components 2 3 What is "Cost of Service" Regulation? Task Name: Cost of Service Study Project Number: 195603.1000 . Rate design - customer classes. It is important that individuals working in the natural gas industry gain an understanding of this process since almost everyone in the industry has some impact on rates. Rate design - customer classes. The key legal standards that have been set are that rates should be "just and reasonable" and that rates should not be derived on an "arbitrary or capricious" basis. service rate making embodied in the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges1, also referred to as the M1 Manual. PUBLIC SERVICE COMMISSION CASE 14-M-0101 - Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision. $340. Also in 2001, AWWA estimated such expenditures to be $250 billion over 30 years, or an average pipe replacement cost of $6,300 per household. . Hawksley Consulting used standard water utility ratemaking practices to calculate the proposed rates as . 4 Information on How Water is Used Policy Objectives. These studies also support the water utility's mission. Denver: 2000. of service ratemaking, capital financing and other financial analysis and repo rting functions. Embedded cost of service studies are more common than marginal cost of service studies. The PSC ratemaking process. Price-level regulation stands as a market-based, incentive-driven . He was a member of the NDWAC Arsenic Cost Work Group, which gave rise to the Affordability Work Group, and is a consultant to utilities. AWWA American Water Works Association. 15 In 1994, I took a position with CH2M HILL an international project delivery - 16 company. Costs should be assigned to the "cost causers." For regulated water utilities, cost of service ratemaking generally requires rates sufficient to recover reasonable operating expenses and to yield a rate of return, measured as cost of capital, on rate base. City of Ashland Water Rates Cost of Service Study March 15, 2016 Page i TABLE OF CONTENTS SECTION PAGE . Widespread in Canada, Great Britain, and other countries around . This 1.5-day course will introduce the student to the ratemaking process as it pertains to the natural gas industry. ORDER ADOPTING A RATEMAKING AND UTILITY REVENUE MODEL POLICY FRAMEWORK Issued and Effective: May 19, 2016 . alongside the customary functions in cost-of-service ratemaking. Rate-Setting Essentials: Connecting Financial Planning, Cost-of-Service and Rate Design AWWA's long-standing Seminar has been revamped and updated for 2021 and is returning live this September! An average-and-excess method by which costs of service are separated into four primary cost components: (1) base costs, (2) extra capacity costs, (3) customer costs, and (4) direct fire-protection costs. $340. Principles of Water Rates, Fees and Charges. $100. He has also taught cost of service and rate design courses for the Government Finance Officers Association of Texas as well as the Texas Section of the AWWA. This three-day course uses time-honored strategies to teach attendees how to set cost-based and defendable rates. In the case of water utilities, the usual basis has been the cost of serv-ice. *For firms registering 4 people or more, at the same time, EBA will provide you a group discounted registration rate of $300 per person for the 4th person and beyond. Arapahoe County Water and Wastewater Authority (ACWWA) authorized Carollo Engineers (Carollo) to review and prepare a Cost of Service Study (Study) and to develop rates and fees for its water and wastewater services. American Water Works Association ("AWWA") and the Water Environment Federation, . For example, when a pipeline files to increase its rates, it makes a . consistent with industry standards established by AWWA's M1 Manual (Principles of Water Rates, Fees and Charges: Manual of Water Supply Practices M1), which documents many of the standards used by . AWWA's Standards Council develops water industry standards approved by the American National Standards Institute. consider. The revenue requirements for most utilities are taken directly from the utility's financial plan discussed in later in chapter 3 of this manual. requirement and cost-of-service analyses to establish cost-based water rates that meet the Methodology - Hawksley used standard water utility ratemaking practices to calculate the proposed rates as promulgated by the American Water Works Association (AWWA). general ratemaking statute, including actual changes in costs, revenues or the cost of the electric public utility's property used and useful, or to be used and useful within a reasonable time after the test period, plus costs associated with a known and measurable set of capital investments, net of Association (AWWA) Manual M‐1, Principles of Water Rates, Fees and Charges (AWWA M‐1). Cost Allocation • A class cost of service study is a study in which the total company cost of service (revenue requirement) is spread or allocated to customer classes. 24 . . The operator is allowed an opportunity to recover its cost of • There should be continuity in the ratemaking philosophy over time. 2010 AWWA Water Utility Compensation Survey RSM McGladrey, Inc. AWWA(a) base-extra capacity method. The American Water Works Association (AWWA) announced recently that it will host its popular Financial Management: Cost of Service Rate-Making seminar in Philadelphia, PA on April 21-23. Task Name: Cost of Service Study Project Number: 195603.1000 . The AWWA ^Principles of Water Rates, Fees, and Charges: Manual of . One is the cost of providing service and the other is the value of the service. Treatment of Carrying Costs During Construction 8.3. Part II of this article contrasts price-level regulation with conventional cost-of-service ratemaking and with Ramsey pricing. Association (AWWA) Manual M‐1, Principles of Water Rates, Fees and Charges (AWWA M‐1). That is, rates should be set at levels that recover a utility's costs to serve the particular customer classes. This report was prepared using the principles established by the American Water Works Association (AWWA). Discounts on booth space and sponsorships at AWWA events may cover the cost of membership alone! For CH2M HILL, I conducted water and wastewater rate studies, prepared Customer, Demand, and Energy Classification 9.3. past one hundred years has been cost of service. the cost-of-service requirements . AWWA Manual M1 Cost Basis and Rationale, 257 Determining the Cost of Providing Service, 258 Example Service Charges, 261 Summary, 272 Reference, 272 Section VI Outside Customer Rates, 273 . Mutli-Registration Discount (4th person and beyond) $300. In general, larger customers have lower cost of service, due to economies of scale - it costs less to serve one very large customer than hundreds of smaller customers with the same total consumption 20 In 1994, I took a position with CH2M HILL - an international project delivery 21 company. The goal is to set pipeline rates at a level that will allow the pipeline to earn a reasonable rate of return, providing both a reasonable return on This committee also prepares the standard for water ratemaking advice, M1, Principles of Water Rates, Fees, and Charges [AWWA, 2012]). . Rate Design. DENVER, CO, Oct. 6, 2009 -- On November 18-20, the American Water Works Association (AWWA) will host the Financial Management: Cost of Service Rate-Making Seminar. 23 . From awwa.org - To help those in the industry, American Water Works Association is proud to announce the 2015 Financial Management: Cost of Service Rate-Making Seminar in beautiful Salt Lake City, Utah, from November 18-20, 2015. Chandler is a member of the American Water Works Association (AWWA) and serves on the AWWA Strategic Management Practices Committee. The . 14 Alternatives to Traditional Cost-of-Service Ratemaking for Natural Gas Pipelines, Regulation of Negotiated Transportation Services, 74 FERC ¶ 61,076 at 61,238-242 (1996). This chapter also introduces the fundamental insurance equation, a key concept that is referenced frequently in other chapters. Key to this work are the many volunteer members of AWWA committees. elements of cost incurred to meet water use variations and resulting peaks in demand. Laurel Quinto's essay "Xcel Energy and Traditional Cost-of-Service Ratemaking: De-risking Investment for a Carbon-Free Electricity Future" received second place in the 2019 Energy Law Writing Competition sponsored the Section of Environment, Energy, and Resources. i TABLE OF CONTENTS Page 26 AWWA Policy Statements. Utility regulatory commissions serve as a "proxy" for competition. The Commission sets rates for interstate pipeline services in a number of proceedings. (1) embedded cost of service studies, and (2) marginal cost of service studies. If utilities practice full-cost ratemaking, all of these costs are recovered through water sales, so revenue loss leads to a subsequent water rate increase, meaning custom - has testified on numerous occasions regarding cost of service studies, rate design and other regulatory and ratemaking matters. NA. Student. The first step in developing cost-of-service rates is to determine the revenue require - ments. ratemaking industry often relies on the Appendix A Methodology, which utilizes system‐wide demand data and customer billing data records that are commonly available to utilities. 24 . 18 Wastewater Utility where I had responsibility for managing cost-of service 19 ratemaking, capital financing and other financial analysis and reporting functions. Develop a Recommended Rate Structure Recovery of fixed costs, conformance to industry practice & legal precedent, administrative burden, agreements, and customer impacts Goal: single structure, with rates for each class based on cost of service 3. Seminars. Congressional Research Service 3 determine the just and reasonable rate, charge, classification, rule, regulation, practice of contract to (hereafter "AWWA Manual M-1") and future Editions of 22 cost of service and rate study models on both cash flow and utility bases involving . *For firms registering 4 people or more, at the same time, EBA will provide you a group discounted registration rate of $300 per person for the 4th person and beyond. The . 2 The objectives of Cost Based Ratemaking under AWWA M-1 are to establish rates that are:3 • fair and equitable • cost-based • proportion to the cost to serve each class of customer The objectives of AWWA M-1 are directly in-line with the requirements of Proposition 218. Cost Allocation • A class cost of service study is a study in which the total company cost of service (revenue requirement) is spread or allocated to customer classes. cost-of-service analysis, rate design recommendations, and culminates in a recommended five-year rate schedule for the District's Canal rates. service ratemaking embodied in the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges4, also referred to as Manual M1. financial plannin , cost of service studies, rate design, impact fee studies, and strategic valuation services throughout the United States. Since leaving Vectren in 2002 to start his own rate and regulatory consulting firm, Mr. Heid has . Cost of Service Ratemaking Overview Before the House Economic Matters Committee January 10, 2019 1 . NA. $140. Base rate (16 TAC § 24.3(7)) The portion of a consumer's utility bill that is paid for the opportunity of receiving utility service, which does not vary due to changes in utility service consumption patterns. With the demand for financial management, capital finance planning, and rate-setting on the rise, this three-day course has become AWWA's best-selling seminar. Schedule a Training UFS is a recognized leader in the utility field, and our expertise makes us well-equipped to help those in the industry grow their understanding of rates and finances. vir onment [AWWA, 2010] is a handbook prepared by members of the AWWA com-mittee charged with the review and devel-opment of standards for water ratemak-ing. Product Details Published: 01/01/1993 ISBN(s): 0898677114 Number of Pages: 16 File Size: 1 file , 770 KB Browse related products from American Water Works Association. If the replacement cost for treatment and pumping equipment is added, the cost rises to almost $10,000 per household. •An embedded cost-of-service study will determine the cost of serving each Cost-Based Rates customer class and allocation to recover projected expenses •60 days of current budgeted expenditures •Capital: $2M minimum in SDC Fund and 1% of original plant in Capital Reserve •Senior Debt Service Coverage above 1.5x Customer Class or Class of Service - A set of customers with similar characteristics who have been grouped for the purpose of setting an applicable rate for electric service Comprehensive Alternative Ratemaking and Timely Recovery. She is also a member of the Tennessee Association of Utility Districts. Cost of Service Principles. Guidance and training on complex utility financial planning and cost of service for professionals. Basic premise - customers receiving same type of service should pay the same rate. AWWA's Technical and Educational Council and Standards Council were established to further AWWA's charter as an international, nonprofit, scientific, and educational society. This three-day Seminar provides an updated lens on how to evaluate and develop financial policies and proposed rates that are cost-based and equitable. This introductory course reviews the basic mechanics of a cost of service and rate design study for water utilities. The City of Austin's recent cost of service ratemaking efforts offer an example of such an approach. Ratemaking Overview Revenue Requirement Cost Allocation. These steps are more fully described in AWWA Manual M1. Basic premise - customers receiving same type of service should pay the same rate. Financing tool. The basis for the proposed rate $415. M-1", "Manual"). AWWA Manual M-54 Costs are less granularly allocated to customer classes through rate structure Data readily available from utility billing systems, such as meter size, dwelling units, and annual and monthly customer use, are used to establish rate structures that more generally apportion costs to customers Most common approach by small systems 8.2.8. American Water Works Association . In early 2019, we argued for this evolution in cost-of-service methodology in a white paper, and the American Water Works Association's (AWWA) Rates & Charges Committee expressed strong support for further development of the concept. In Cost of Service regulation, the regulator determines the Revenue Requirement—i.e., the "cost of service"—that reflects the total amount that must be collected in rates for the utility to recover its costs and earn a reasonable . The study includes the following: • Development of a financial plan based on the 20 year capital plan Ratemaking Principles and Individual Wholesale Rates . . I am a member of the American Water Works Association (AWWA), the 3 Chesapeake chapter of the American Water Works Association (CSAWWA), the . Under the "cash basis" of ratemaking, the costs of service are measured by . (4 for ratemaking purposes, ten percent (10%) of the Acquisition Savings . In general, larger customers have lower cost of service, due to economies of scale - it costs less to serve a 1-megaWatt load than 1,000 1-kiloWatt loads 22 cost of service and rate study models on both cash flow and utility bases involving . American Water Works Association • AWWA is the largest organization of water professionals in the world • Founded in 1881 . Otay did not charge based on its costs of providing water at these levels. Some jurisdic ons use both, while others only rely on one type. Laurel is a student at the University of Colorado Law School. • Cost of Service Study - Each customer class is assigned cost responsibility (expenses and plant) through an analysis of the class impact on utility costs. $415. Event Overview. Merl Hackbart University of Kentucky Merl Hackbart is professor of finance and administration at the University of Kentucky, • Customer Class or Class of Service - A set of customers with similar characteristics who have been grouped for the purpose of setting an applicable rate for electric service A brief description of the process follows. Embedded vs. Smart Grid Costs 9.4. Specifically. in a reduced level of cost as compared to the level which would exist for the separate companies on an aggregate basis ("Acquisition Savings"). These are ways to move beyond the general rate cases of cost of service regulation and bring into rates future costs from investment projects and other sources. The following material is intended to be an introduction to cost -of-service ratemaking which remains the primary methodology used by the Commission to establish just and reasonable rates. the first step in the ratemaking analysis is to determine the Water Rates, Fees, and the Legal Environment Large Utilities (over 100,000 population served) v About the Authors James H. Cawley (above right) served two terms as a member of the Pennsylvania Public Utility Commission (PUC), from 1979 to 1985 and from 2005 to 2015, the second longest combined tenure in the Commission's (and its predecessor, the Public Service Commission's) history dating to 1913. 34 states for Electricity and 18 states for Natural Gas Delivery have some form of comprehensive alternative regulation. 2021 Utility Management Conference, Atlanta, August 3-6. The advent of a utility 13 City of Austin's Water and Wastewater Utility where I had responsibility for managing cost - 14 . • Customer Class or Class of Service - A set of customers with similar characteristics who have been grouped for the purpose of setting an applicable rate for electric service Seminar: Rate-Setting Essentials- Connecting Financial Planning, Cost-Of-Service and Rate-Design, Dallas, November 5-7. AWWA(a) base load. proportionate to its share of the cost to EWEB of providing water using standard cost-of service and ratemaking principles as described in Manual M-1, published by AWWA Manual of Water Supply Practices-M1. American Water Works Association (AWWA) and the AWWA Research Foundation (AWWARF). Revenue MODEL Policy FRAMEWORK Issued and Effective: may 19, 2016 attention to the ratemaking process revenue... The advent of a utility < a href= '' https: //www.wwdmag.com/august-2001-legal-stream '' > August 2001 Stream! 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Awwa is the cost of providing service and rate setting have become critical tasks that demand reliable tools. - techstreet.com < /a > student AWWA ^Principles of Water rates, Fees and Charges ( )...

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