Crowley and McLeod Analyze Distribution Utility Costs

Categories: Cost of Capital, Cost-of-Service, Performance-Based Ratemaking

April 23, 2024 - Nicholas Crowley and Dan McLeod

Analysis by Mr. Nicholas Crowley and Dr. Daniel McLeod finds that consumer prices for electricity have increased substantially since the Covid-19 pandemic. In “Trends and drivers of distribution utility costs in the United States: A descriptive analysis from 2008 to 2022,“ the authors report that rate increases have corresponded with coal and natural gas commodity price spikes. While distribution utility costs have also grown, data from the Energy Information Administration highlights that power production remains the dominant cost factor for utilities. This situation creates a challenging scenario for distribution utilities, which face rising input costs yet must balance these with customer affordability concerns.

Crowley and McLeod’s analysis can be found in the April 2024 issue of The Electricity Journal.