Iowa Administrative Code › Agency 199 - Utilities Division › Utilities and Transportation Divisions › Chapter 20 - Service Supplied by Rate-regulated Electric Utilities › Rule 199-20.10 - Ratemaking Standards

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Coverage.
Standards for ratemaking shall apply to all
				rate-regulated utilities in the state of Iowa. The board may, by rule or by
				order in specific cases, exempt a utility or class of utilities from any or all
				ratemaking standards. The standards are recommended to all service-regulated
				utilities in this jurisdiction.
(2)
Cost of service.
Rates charged by an electric utility for
				providing electric service to each class of electric consumers shall be
				designed, to the maximum extent practicable, to reasonably reflect the costs of
				providing electric service to the class. The methods used to determine class
				costs of service shall to the maximum extent practical permit identification of
				differences in cost-incurrence, for each class of electric consumers,
				attributable to daily and seasonal time of use of service, and permit
				identification of differences in cost-incurrence attributable to differences in
				demand, energy, and customer components of cost.
The design of rates should reasonably approximate a pricing
				  methodology for any individual utility that would reflect the price system that
				  would exist in a competitive market environment. For purposes of determining
				  revenue requirements among customer classes, embedded costs shall be preferred.
				  For purposes of determining rate designs within customer classes, long-run
				  marginal cost approaches are preferred although embedded cost approaches may be
				  considered reasonable.
Nothing in this rule shall authorize or require the recovery
				  by an electric utility of revenues in excess of, or less than, the amount of
				  revenues otherwise determined to be lawful by the board.
Guidelines for use in evaluating the acceptability of methods
				  of class cost of service estimation include, but are not limited to, the
				  following:
a. All usage of customer,
				demand, and energy components of service shall be considered new
				usage.
b. Customer classes shall be
				established on the primary basis of reasonably similar usage patterns within
				classes, even if this requires disaggregation or recombination of traditional
				customer classes.
c. Generating
				capacity estimates or allocations among and within classes shall recognize that
				utility systems are designed to serve both peak and off-peak demand, and shall
				attribute costs based upon both peak period demand and the contribution of
				off-peak period demand in determining generation mix. Generating capacity
				estimates and allocations among and within classes shall be based on load data
				for each class as described in 199-subrule 35.9(2).
d. Transmission and distribution capacity
				estimates or allocations among and within classes shall be demand-related based
				upon system usage patterns, and the load imposed by a class on the transmission
				or distribution capacity in question.
e. Customer cost component estimates or
				allocations shall include only costs of the distribution system from and
				including transformers, meters and associated customer service
				expenses.
f. Methods of cost
				estimates or allocations among customer classes shall recognize the differences
				in voltage levels and other service characteristics, and line losses among
				customer classes.
g. Methods of
				class cost of service determination which are consistent with zero customer,
				demand, or energy component costs or major categories of these, such as
				generation, transmission or distribution, shall be considered unacceptable
				methods.
h. Long-run marginal cost
				methods of class cost of service determination shall clearly reflect changes in
				total costs to the utility with respect to changes in the outputs of customer,
				demand, or energy components of electric services.
i. The use of an inverse elasticity approach
				to adjust long-run marginal cost-based rates to the revenue requirement shall
				be unacceptable. Other approaches will be considered on a case-by-case basis.