Design considerations for multiyear Public Utility rate plans

Abstract

Regulatory experts generally agree that good regulation leads to high economic efficiency, fairness, and moderate regulatory costs. These three features have characterized good regulation going back to the beginning of the previous century. This paper will try to show that wellstructured and executed multiyear rate plans (MRPs) can be more compatible with the public interest, compared with the traditional rate-of return approach to setting utility rates. Substandard MRPs, however, can produce worse outcomes for utility customers.