Cost Challenges for Today’s Utility
Mechanical Engineering building, UW-Madison campus
1513 University Ave., Rm 1106
Is cost allocation truly more of an art than a science? Is a cost of service study still relevant in today’s world?
Can a “one size fits all” approach be used? How do electric and natural gas cost allocation approaches differ?
This program will explore the answers to these questions, how to deal with the challenges in determining costs,
and how allocation of costs is changing.
8:15-8:30 Registration check in and welcome coffee
8:30-9:30 Introduction to Current Cost Allocation Methods — What is a cost of service study? What is its purpose? How has the landscape changed over time? How to deal with marginal cost vs. embedded cost? Learn from this session how costs are split up by function, what the cost drivers are, and how to allocate costs. Bruce Chapman, Vice President, Christensen Associates Energy Consulting Chapman presentation
9:45-10:45 Public Service Commission of Wisconsin Perspective on Cost Allocation – Hear from Commission staff on how the Commission views the importance of cost of service, as well as key cost of service issues that arise in rate case applications. Also hear from Commission staff about what regulatory changes are foreseen. Kate Christensen and Sam Shannon, Rates and Energy Analysts, Public Service Commission of Wisconsin Christensen and Shannon presentation
11:00-12:00 Utility Perspective on Cost Allocation – What are the strengths and weaknesses of how utilities use cost of service studies? What are the cost underpinnings of the debate regarding pricing for distributed energy resources? (What distribution costs should a DER customer cover, and what costs do utilities avoid in serving DER customers?)
Moderator: Scott Smith, Assistant Vice President, Business and Regulatory Strategy, Madison Gas and Electric
1:00-2:00 Customer Perspective on Cost Allocation – In this session, you will hear about how an intervenor uses a cost of service study and what some of the differences are between an intervenor and a utility on the importance of a cost of service study. Customer Perspective presentation
Moderator: Kira Loehr, Senior Counsel, Perkins Coie
2:00-2:45 Key Differences between Electric and Natural Gas Cost of Service Studies – Hear from an expert who has performed cost of service studies on all of the natural gas utilities and most of the electric utilities that service their Michigan ratepayers. Learn what the differences are between electric and natural gas cost of service studies. You will also hear about the Michigan Public Service Commission’s perspective on the various attributes of the cost of service study regarding cost allocations, classifications and functionalization per state statute or its orders. Bonnie Janssen, Public Utilities Engineer Specialist, Energy Markets Section, Michigan Public Service Commission Janssen presentation
3:00-4:00 Future Directions for Cost of Service Studies/Rate Regulation – This panel of experts will share their thoughts on the increased use of marginal cost-based allocation of embedded costs at vertically-integrated utilities. Additionally, they will address how costs are benchmarked, discuss the purpose and role of alternative regulation in cost management, and elaborate on some of the technical challenges and methods available for allocating costs.
Moderator: Steven Fenrick, Leader, Economics and Market Research, Power System Engineering, Inc.
Panel: Bruce Chapman
Your registration fee includes welcome coffee, breaks, and lunch.