A method of establishing rates which departs from the cost-of-service standard in setting just and reasonable utility rates. Performance Based Rates generally afford utilities the opportunity to increase profits by exceeding targets for efficiency and cost savings. This type of methodology purports to streamline regulatory process by replacing rate hearings with annual, accounting-type reviews. Cost of service studies might not be required at all, once initial rates are fixed.
« Back to Glossary Index
Sign Up for Updates
"*" indicates required fields