- Rate case
A rate case is the formal process which industries that have the legal designation of
public utilityare mandated to go through in order to set the rate at which they are allowed to charge consumers for their service. Rate cases serve as one of the primary instruments of government regulationof such industries.
United States, where many industries classified as public utilitiesare either private businesses or publicly traded corporations, a rate case is typically carried out through the authority of a state or federal regulatory body whose regulator jurisdiction includes the territory that the industry in question services.
Historically, many different classes of business, ranging from
harborservices, the railroadindustry to the delivery of milkhave been classified as public utilitiesand thus have been legally mandated to go through the process of a rate casein order to determine the allowable service charges for their industry. Although the classification of businesses as public utilitieshas seen different criteria for inclusion over the the history of such legal designation, typically such businesses must constitute a "de facto" monopolyfor the services they provide within the jurisdiction in question. In the past such businesses have included railroads (before the advent of interstate highways), natural gasproduction ( wellheadpricing) of natural gas and the telecommunications industry (substantially the historical monopoly of AT&Ton POTS landline services). Technological innovation and economic changes have often left industries that were at one time characterised by monopoly character open to more competitive market environments. Since the advent of technological innovations in the telecommunicationsindustry and the competition of interstate highways for railroadbusiness typically the only industries subjected to the rate case process are the electric power industry, the natural gasindustry and the water industry, although aspects of the natural gas industry have since the mid 1980s seen phased deregulationand attempts have been made to deregulate the generation aspects of electric utilityservice.
Rate Cases in Specific Industries
Electric Power Industry
In the electrical utility industries, rate cases are typically held between the regulated utility and a state
public utilities commission. In addition, any interested parties may intervene in electric utility rate cases. Typically those intervenors will be industry consortiums representing industrial users or other large scale consumers of electricity, or other dedicated advocacy groups. Rate cases proceed via an administrative lawformat.
United Statesthe regulation of rates typically occurs at the state level under the jurisdiction of a state public utilities commissionalthough the Federal Energy Regulatory Commission(formerly the Federal Power Commission) also exercises authority over questions of intrastate wholesale sales of electric power.
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