Participants discuss regulatory options during a September 2015 cost-reflective tariff training in Abuja, Nigeria.
NARUC supports efforts to ensure that the tariffs underpinning utilities’ rates and customers’ bills are accurate and just. We work with regulators to implement advanced financial accounting practices, revise tariffs to ensure they are cost-reflective, and ensure that tariffs provide investors with the proper signals.
Establishing a sound economic basis for energy prices is one of the most critical functions of the energy regulator. Pricing has broad implications for the health of the national utility sectors and economies. Tariffs provide a necessary signal for investors who depend on steady revenue streams to manage stable energy supply and modernize the sector. Existing inefficiencies in energy systems across the globe reinforce the need for stronger efforts to establish cost-reflective tariffs and financially viable electricity sectors.
With support from the United States Agency for International Development (USAID), NARUC developed a gamified training on designing and applying cost-reflective tariffs that blends capacity-building with scenario-based simulation: energy sector stakeholders participate in an interactive format – a game – that explores regulatory decision-making and sustainable energy sector development.
Participants work in small teams, debating real-world challenges and analyzing the implications of different regulatory choices. This training provided a platform to establish further collaboration and dialogue, enabling participants to exchange perspectives with each other and learn the pricing and sustainability impacts of these choices. This training can be applied across a number of topics in a modular manner.
NARUC has already achieved the following results from the cost-reflective tariff simulation:
Cost-Reflective Tariff Toolkit
With the support of the USAID Energy Division, Office of Energy & Infrastructure, NARUC is working on the development of a Cost-Reflective Tariff Toolkit consisting of a series of primers focusing on the regulator’s role with achieving cost-reflective tariffs.
Each primer is short and practical, and is meant to be used by utility service regulators in countries with emerging economies in order to design rates that are based on actual cost of service and to effectively engage the public and key stakeholders in the decision-making process.
Project Dates: 2014-Present