The commissions typically certify that a plant's construction is needed. After completion it reviews the costs and practices involved in the construction. The utility must prove that the expenses are reasonable. Under the current regulatory system, rate cases are generally resolved in one to two years. The time it takes to resolve a rate case varies by state depending on the size of utilities, the percentage rate increase and simply the fact that some state commissions move more quickly than others.
Utilities present detailed information to the commission in a rate case.
During the review process, the commission will carefully audit all details of the utility's business operations in order to determine if the utility is indeed asking for an appropriate rate increase. The commission is required to go through all elements of the utility's cost structure and has the right to say exactly how much the utility can charge its customers. Commissions have traditionally and purposefully scheduled gradual rate increases to help the customer avoid the economic burden of a sudden, drastic increase in the cost of electricity. This process of deferred costs has helped keep rates low for consumers but has contributed to potentially stranded costs for utilities.