ratecase

A ratecase, also written as rate case, is a formal regulatory proceeding before a government agency—typically a state public utility commission or, in some jurisdictions, a federal regulator—to set or modify the prices that a regulated utility may charge its customers for services.

In a ratecase, the utility files an application outlining proposed revenue requirements, including the rate base, operating expenses, depreciation, taxes, and capital structure. The regulator determines the allowed costs and a reasonable return on investment, then designs rates that recover those costs while ensuring reliable service and just compensation for the utility.

The process generally includes public notice, written discovery, and hearings where evidence and expert testimony are presented. After deliberation, the regulator issues a final order establishing approved rates, rate design, and any related riders or conditions. New rates typically become effective on a specified compliance date, with mechanisms for phased implementation or temporary surcharges in some cases.

Key concepts involved are rate base, rate of return, revenue requirement, test year, cost of service, and rate design. Rate design determines how costs are allocated among customer classes (e.g., residential, commercial, industrial) and may include fixed charges, volumetric charges, and tiered pricing. Outcomes can include approved rate changes, refunds for over-collection, or surcharges for specific programs or costs.

Rate cases are common for electric, gas, and water utilities and may also apply to interstate pipelines and certain regulated services under federal oversight.