38.5.2008 RATE DESIGN
(1) Rate design is a key element in the integrated least cost planning process. A long-term resource planning process that is consistent with the guidelines will:
(a) explicitly recognize and utilize the ability of rate design to yield demand-side resources. Although rate designs will be determined in contested case proceedings, on-going integrated least cost planning encompasses such proceedings. Therefore, utilities should keep resource planning in mind when proposing rate designs.
(b) ensure that, to the extent possible, the goals and objectives of all rate design efforts are consistent with the goal and definition of integrated least cost planning, while recognizing other rate design objectives such as rate stability. In considering rate design as it relates to integrated least cost resource planning and acquisition, the influence of externalities should be incorporated into prices proposed in rate case proceedings. Total marginal cost of service derived in rate case proceedings should reflect total societal cost as described in these guidelines.
(2) If a utility is faced with the potential loss of a large industrial load and is considering a request for a retention rate, it should use least cost planning methodologies and tools to evaluate the impacts of retaining or losing the load and to consider alternatives such as efficiency improvements and pricing alternatives.