Multi-Year Tariff Determination Modelling
We have developed a Multi-Year Tariff Order (MYTO) Analyzer Model for tariff rate setting for five and then ten-year price controls including derivation of cost-reflective tariffs and forecasting financial performance that include Return on Investment for distribution companies.
The developed models take into account the tariff structure, whereby costs of Generation, Transmission, Market and System Operation and Distribution (the total system costs) are inputs to the tariff setting. These costs include a reasonable Return on new Investment and the existing Regulatory Asset Base for Discos.
The models allow for shaping tariffs over the regulatory price control period (in this case 5 or 10 years) so as to “sculpt” tariffs to avoid customer price shock. The tariffs also include options for alternative rates by customer category (e.g., residential, commercial).
The model has been used for regulatory tariff filings and submission to NERC of multi-year tariff determinations for two successive major and five bi-annual tariff reviews since 2014.