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Rate Consolidation

Rate Consolidation or single-tariff pricing has been recognized as the norm for electric, natural gas and telephone utilities. These utilities often serve large territories wherein costs of service can be substantially different from region to region within the service territory. For example, costs of service for urban customers will be different from rural customers and differing geographic terrains impose different costs. Yet all customers in a particular class enjoy the same rates. This has allowed these industries to spread the benefits of economies of scale to all of their customers and to mitigate rate shock effects and affordability concerns. Although Single-Tariff Pricing has been controversial for water utilities, it should nonetheless be recognized as a "best practice" especially in view of the challenges facing the industry in the future. The inability to charge uniform rates inhibits the acquisition of troubled utilities, can result in rate shock or unaffordable rates to customers in certain areas, and significantly increases the complexity and cost of regulatory proceedings, all to the detriment of ratepayers, the utility and sound public policy.

This PDF is a 50-state survey regarding the practice of individual commissions on Rate Consolidation.

State Utility Regulation

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