The Price Customers Pay
Svetlana Atoyan is Managing Consultant and Josnelly Aponte is Managing Consultant, Leading Utility Rate Design Experts at Atrium Economics.
Every utility customer sees the outcome of rate design; it’s printed on their monthly bill in the form of prices. Rate design translates the Cost-of-Service Study (COSS) into actual customer bills by applying principles and policy choices that determine how the identified costs for each customer class are reflected in the prices. While the COSS provides the blueprint, rate design is the architecture, shaping how customers experience the value, responsibility, and incentives embedded in utility rates.
Unlike cost allocation, which emphasizes proportionality and technical analysis, rate design invites broader questions. What does fairness look like within a group of customers who may use energy very differently? Who benefits under different structures? Which signals encourage efficiency, and which foster confusion? This is the stage where regulatory discretion is most visible and most consequential.
Rate design decisions influence customer behavior, utility revenue stability, and the perception of fairness. Getting it right is about more than economics; it’s about aligning public service with utility realities. And because rates influence everything from household budgets to long-term investments in technology, sound rate design must do more than just balance numbers. It must ensure suitability for today’s needs and tomorrow’s challenges.