3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL SHORT RUN MARGINAL COSTS
p. pp. 6-7
3.0 RELATIONSHIP BETWEEN AVERAGE COST BASED RATES AND ACTUAL SHORT RUN MARGINAL COSTS SRMC test results are determined by comparing appropriately modified average unit revenues for each rate class to actual marginal costs, adjusted for cla...
AI summary This section discusses the relationship between average cost-based rates and actual short-run marginal costs (SRMC). It explains that SRMC test results are determined by comparing average unit revenues to marginal costs, adjusted for line losses. Rate setting is influenced by forecasted rather than actual costs, leading to variations between revenues and actual costs.