Helping a large gas utility implement COST™ to allow in-house development of cost of service and rate design

Background

A large gas utility serving over 750,000 customers wanted to purchase a study to run scenarios in house. They also had a desire to be able to run scenarios in two other jurisdictions for rate cases.

The utility engaged MCR to develop the Cost of Service Tool (COST™) to enable the utility to run these scenarios in-house. Ultimately the client wanted to run the model in future proceedings for their rate proceedings and special studies.

Solution

MCR developed their COST™ model using the client’s revenue requirements as an input and created the study as well as integration into the rate design. MCR also provided expert testimony for the rate case regarding the COST™ model and associated rate design. Hands-on training and documentation were provided to the company for their use in the future.

Results

The COST™ model took direct feed from the financial records and revenue requirements model to create an in-house model that was used in a current rate case. At the client’s direction, the COST™ model has the capability to be used in future rate cases in the same jurisdiction as well as two other jurisdictions in which they provide service. Having an in-house model allows the client to continue to use and customize it, freeing them of using consultants on a long-term basis.