Presented to: CPUC Workshop Balanced Rates Rulemaking (R.) 11-11-008
The Bonbright principles of rate design
- Economic efficiency
- Revenue recovery and stability
- Rate and bill stability
- Rate attributes: simplicity, understandability and acceptance
- Customer satisfaction
There is a misalignment between rate structure and cost structure in current rates
Cost structure
- Fixed costs represent about 70% of total costs
- Variable costs represent about 30% of total costs
Rate structure
- Fixed charges represent about 30% of total revenues
- Variable charges represent about 70% of total revenues
This misalignment leads to economic inefficiency
A solution, consistent with the principle of gradualism, is to move toward a more balanced rate structure (shown in the following slides)
To view this presentation in full, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.