Course Description

Setting rates is probably the most important function of a regulator and utility and is a key factor in the success or failure in the provision of utility services. In this course participants will explore the latest strategies on rate setting and subsidy design as well as discuss practical examples illustrating how rates are calculated in different sectors and countries.

This course contains six modules, each module conducted over a one-week period of time. Participants will be responsible for completing reading assignments, analyzing case studies, actively participating in discussion boards and chat rooms with fellow participants and the course instructor, and completing an action plan.

Participants will need access to a computer with Internet connectivity. Course work is approximately 5-6 hours per module/week.

 

IP3’s team of training experts offers practical experience with top presentation skills. Participants who successfully complete the course requirements will receive a Certificate of Achievement.

 

By the end of the course, participants will have achieved the learning outcomes provided below.

Learning Outcomes:

• Illustrating and calculating rates and analyzing utility financial information
• Illustrating advanced techniques in cost of service, asset usefulness and demand profiling
• Applying the key principles of subsidy design and comparing different methods to reduce the financial burden of implementing subsidies
• Analyzing transitional strategies for cost-recovery
• Engaging in online group discussions with peers and experts worldwide
• Creating your own Action Plan to plan for a tariff structuring/subsidy design
• Engaging and building professional relationships with your fellow participants and leading regulatory specialists, commissioners, and financiers

Outline

 

Course Module Topics
Module I:	The Process of Rate Setting Goals and objectives of pricing strategies Understanding marginal/incremental costs Fixed and variable costs analysis Determining revenue requirements Rate design options and techniques for water, electricity, telecommunications, and transport
Module II:	The Cash-Needs Approach Determining revenue requirements of the utility Comparisons with investor-owned utilities Allocation of costs Distribution of costs to consumer cases: commercial, residential, and government Rate design and impacts on customer classes
Module III:	Rate of Return Approach and Analysis Determination of revenue requirements: rate base; income and expenses; cost of capital Use of and adjustments to financial statements Strengths and weaknesses to the ROR method Allocation and distribution of costs Rate design and the impact of rate-of-return
Module IV:	Price Cap Approach and Analysis Defining the price cap structure Rate rebalancing strategies Defining the baskets Determining the X factor Setting the productivity factor Other potential formula factors
Module V:	Revenue Cap Approach and Analysis Determining the revenue cap Differences between price cap/revenue cap Differences between ROR and revenue cap Rate design
Module VI:	Rate and Subsidy Design Strategies Are subsidies justified? Identifying existing subsidies and identifying targets for future subsidies Willingness and ability to pay Economically efficient mechanisms to structure subsidies Developing subsidy reduction strategies
Module VII:	Case Study Analysis
Module VII:	Action Planning

 

Requirements for Completing the Course

 

Setting rates is probably the most important function of a regulator and utility and is a key factor in the success or failure in the provision of utility services. In this course participants will explore the latest strategies on rate setting and subsidy design as well as discuss practical examples illustrating how rates are calculated in different sectors and countries.

This course contains six modules, each module conducted over a one-week period of time. Participants will be responsible for completing reading assignments, analyzing case studies, actively participating in discussion boards and chat rooms with fellow participants and the course instructor, and completing an action plan.

Participants will need access to a computer with Internet connectivity. Course work is approximately 5-6 hours per module/week.