Forecasting Loads and Designing Rates for Electric Utilities

The Analytic Hierarchy Process can be used to design rates to fulfill specific goals for ratemaking. To achieve these goals, a costing methodology must be chosen among various available types including those based upon accounting costs and marginal costs. The AHP can be employed with companies, regulators, and customers to reconcile conflicting interests in making these choices among costing methodologies. Since construction costs have a major impact upon future rates, accurate load forecasts are essential for adequate ratemaking. Again, the AΗΡ presents a simple and rational decision aid for making such forecasts. In the cases of ratemaking and load forecasting, the AHP is much easier than traditional methods that regulators have used to make these decisions.