Five Key Strategic Considerations for the Utility Regulatory Process

Of the many business functions unique to utilities, the process of setting rates is probably the most arcane and least understood by those outside the industry. While developing a financial model in support of a given tariff is relatively straightforward and formulaic, implementing it in the rate-setting process comes with myriad subtleties. The state-level regulatory context typically involves a quasi-judicial process and multiple constituents with different and often competing motivations. This paper examines some strategic considerations associated with the rate-setting process, highlighting the importance of the utility’s regulatory relationships.