Regulatory Best Practices
The Regulatory Program serves as a clearinghouse for information on regulatory best practices.
The National Association of Regulatory Utility Commissioners (NARUC) Water Committee supports review and consideration of a broad array of innovative regulatory policies and best practices as detailed in its July 2005 resolution. The Water Committee recommends that economic regulators consider and adopt as many of the regulatory best practices as appropriate.
Distribution System Investment Charge (DSIC) for Water and Wastewater Systems
This program allows for rate increases for non revenue producing investments to replace aging infrastructure. Benefits of the DSIC program include more efficient and timely investment of capital, significant progress in replacing aging infrastructure, enhanced service quality, reduction of water lost through leaks, avoidance of rate shock, and many others. Read more
Prospectively Relevant Test Year
In a rising cost industry with heavy capital investment requirements, the use of historic test years assures there will be no return on or recovery of capital that is invested during the test year and thereafter, until the utility files another rate case. A "Best Practice" in this area would provide the utility with the obligation to identify the most prospectively relevant test year and the choice to use that test year in a rate proceeding. The utility would have the choice of utilizing a historic, current, or future test year and would have the burden of demonstrating the propriety of that choice in the rate proceeding. Read more
Acquisition Adjustment
Allowance of an acquisition adjustment provides for the difference between depreciated original cost and a purchase price. Such policies should be recognized as a "Best Practice" for the water industry, but should be extended to include acquisitions that involve entities that may not be small or non viable. Read more
Construction Work in Progress (CWIP)
New major treatment facilities or development of long-term sources of supply may take a number of years before they become operational. Typically these costs have been accounted for in one of two ways – the use of CWIP in ratebase or Allowance for Funds Used During Construction (AFUDC). Read more
Decoupling
As source of supply constraints increase, drought conditions affect certain areas of the country with greater frequency, and the cost of treating water continues to rise, water utilities have an increasing responsibility to encourage the wise use of this precious resource by their customers and, where appropriate, to implement programs that could have the effect of reducing per capita consumption.
Read more
Pass-through Adjustments
Pass-throughs include automatic adjustment mechanisms for costs beyond the utility's control, such as purchased water. Read more
Rate Consolidation
Rate Consolidation or single tariff pricing has been recognized as the norm for electric, natural gas and telephone utilities. Read more
Mediation and Settlement Procedures
Defined Timeframes for Rate Cases
(i.e., suspension period)
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