TABLE 1: Cost Categories Cost Description Example Marginal Forward-looking, Costs of meters, service drop, and Customer Cost customer-specific costs final line transformer; the cost of of providing electric sending monthly bills, cost of service that vary with responding to customer inquiries the number of customers Non-Marginal Customer-related costs Cost of meter data processing Customer that do not vary with center, customer billing facility, Costs small changes in the utility’s phone center number of customers served Marginal Forward-looking Cost of capacity upgrades to wires, Distribution distribution costs that line transformers, and distribution Costs vary with aggregate substations customer demand on distribution facilities in kilowatts Non-Marginal Distribution costs that Cost of poles, cost of replacing Distribution do not vary with deteriorated distribution facilities Costs demand in kilowatts that do not include a capacity upgrade, and historical costs associated with distribution rate base that are recovered in distribution rates Marginal Forward-looking costs of A new combustion turbine generator Generation generation capacity that needed to supply system or local Capacity Costs vary with system or local area demand demand in kilowatts Non-Marginal Historical costs Historical costs associated with Generation associated with generation rate base that are Cost generation rate base that recovered in generation rates do not vary with current or future demand in kilowatts
TABLE 1: Cost Categories Cost Description Example Marginal Customer Cost Forward-looking, customer-specific costs of providing electric service that vary with the number of customers Costs of meters, service drop, and final line transformer; the cost of sending monthly bills, cost of responding to customer inquiries Non-Marginal Customer Costs Customer-related costs that do not vary with small changes in the number of customers served Cost of meter data processing center, customer billing facility, utility’s phone center Marginal Distribution Costs Forward-looking distribution costs that vary with aggregate customer demand on distribution facilities in kilowatts Cost of capacity upgrades to wires, line transformers, and distribution substations Non-Marginal Distribution Costs Distribution costs that do not vary with demand in kilowatts Cost of poles, cost of replacing deteriorated distribution facilities that do not include a capacity upgrade, and historical costs associated with distribution rate base that are recovered in distribution rates Marginal Generation Capacity Costs Forward-looking costs of generation capacity that vary with system or local demand in kilowatts A new combustion turbine generator needed to supply system or local area demand Non-Marginal Generation Cost Historical costs associated with generation rate base that do not vary with current or future demand in kilowatts Historical costs associated with generation rate base that are recovered in generation rates
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