Many US utilities will need to significantly increase their retail electric rates over the next ten years to fund capital investment programs in a low load growth environment. If utility executives want to avoid the perception that they are “gold-plating” their systems, they will need to understand how their spending decisions will impact retail rates relative to their peers.
CRA Energy Practice consultants Jim McMahon and Pat Augustine have been reviewing this issue for several utility clients. In this video, they discuss:
- The earnings and shareholder value risks that utilities are facing from rising retail rates and how rate growth should be factored into capital allocation decisions.
- Recent projects where CRA conducted peer utility rates review and other analysis to support strategy and capital investment plans.
- CRA’s Peer Electric Rates Forecasting Model – a bottom-up cost of service model that projects electric retail rates for all utilities in the US based on public forecasts and expert opinions regarding load growth, CapEx, and O&M, and more.
