Allocation of capacity costs

Journal Article · Thu Dec 16 04:00:00 EST 1976 · Public Util. Fortn.; (United States)

OSTI ID:7132007

Granger, R M

It is the general consensus that rates for electric service should be based upon, or related to, the cost of that service. This follows directly from the ''reasonable return'' premise. It is also accepted (at least among those familiar with the economics of utility operation) that the cost of service varies with the particular characteristics of use of the electric service subscribers. A step, then, in sound rate making must be the isolation of costs associated with providing electric service by service classifications. The cost allocation study is an engineering study guided by principles of law, economics, and accounting which apportion revenues, expenses, and rate base among various groups of customers of a given utility. This study is confined specifically to electric utilities, and is a difficult task because much of an electric system is used in common by all classes of service. The allocation of demand related costs is a most controversial area. Many methods of allocating capacity costs have been devised in an attempt to assess the relative responsibility of each customer class. The types of demand measurements that have generally been utilized successfully are average demand method, peak responsibility method, noncoincidental demand method, and average and excess demand method. These are discussed and compared. (MCW)

• Research Organization: Chas. T. Main, Boston
• OSTI ID: 7132007
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 98:13; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

20 FOSSIL-FUELED POWER PLANTS
200106 -- Fossil-Fueled Power Plants-- Economics
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
296000* -- Energy Planning & Policy-- Electric Power
ACCOUNTING
ALLOCATIONS
CAPITAL
CHARGES
COMPARATIVE EVALUATIONS
COST
ECONOMICS
EFFICIENCY
ELECTRIC POWER
LAWS
LOAD MANAGEMENT
MANAGEMENT
POWER
POWER GENERATION
PUBLIC UTILITIES