Manage episode 213056010 series 2397296
Gary VerDouw, a former American Water employee and now an independent rate and regulatory consultant, discusses the often misunderstood process of setting rates for investor-owned water utilities. Gary has tremendous experience having worked on investor-owned water utilities in multiple jurisdictions and having testified on rate cases before no less than seven public utility commissions. Gary does a tremendous job filling you in on the how, what, why and where of investor-owned water utility rates.
In this session, you’ll learn about:
- How investor-owned utilities set rates differently than municipal utilities
- What are the four numbers required to set investor-owned utility rates
- Where the real fight usually is in investor-owned utility rate cases
- How an investor-owned utility’s rate base is determined
- How cost of common equity is determined
- How the weighted cost of capital is determined
- What is an investor-owned utility’s net operating income
- How net operating income is calculated
- What single tariff pricing is and why it’s beneficial
Resources and links mentioned in or relevant to this session include:
- Gary’s LinkedIn page
- Wikipedia Page on Utility Ratemaking
- The SCOTUS decisions that are the bedrock of utility rates: Federal Power Commission v. Hope Natural Gas Co. (prudently incurred expenses are recoverable) & Bluefield Water Works v. Public Service Commission (investors entitled to opportunity to earn fair rate of return on investment)
- Blog Post from UNC’s Environmental Finance Center: Myths about Water Rate Setting
- TWV #121: Anatomy of Municipal Rates with Scott Miller
Thanks to each of you for listening and spreading the word about The Water Values Podcast! Keep the emails coming and please rate and review The Water Values Podcast on iTunes and Stitcher if you haven’t done so already. And don’t forget to tell your friends about the podcast and whatever you do, don’t forget to join The Water Values mailing list!
The post The Mechanics of Investor-Owned Utility Rate Cases with Gary VerDouw appeared first on The Water Values.
259 episodes available. A new episode about every 17 days averaging 45 mins duration .