Multiyear rate plans from the perspective of the public interest

Abstract

Traditional rate-of-return ratemaking has undergone critical review at least since the early 1960s. Various stakeholders and academic economists have offered proposals to improve, replace, or supplement it with mechanisms that attempt to redress the supposed deficiencies underlying traditional ratemaking. One such mechanism is multiyear rate plans (MRPs). Whether MRPs are in the public interest is the ultimate question for utility regulators to address, but one that has no clear answer.