NREL Conduit Blog

The NREL Conduit Blog discusses research relevant to state, local, and tribal governments. Contributing authors provide posts related to events, policy analysis, and decision support outcomes to inform the market in a credible and timely fashion.

Phrase of the Day: Rate Base

Sept. 16, 2015 by Alexandra Aznar, Joyce McClaren

Rate of return regulation is a type of regulation that allows utilities to cover their operating expenses (i.e., variable costs) and ensure a fair rate of return on capital investments. The public utility commission determines the allowable rate of return for each utility. The utility’s rate base is the total value of a utility’s assets (e.g., plant, equipment, working capital, and deductions for accumulated depreciation). Both the rate of return and the rate base are components of the utility’s revenue requirement, which the utility collects from customers in the form of electricity rates.


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