Basic Rate Dynamics  Utility rates designed to yield revenues equal to the utility's total cost of service (COS), which includes all capital and operating costs incurred to provide service to customers  Ideally, revenues would exactly match COS, but that is difficult to achieve  Rates are usually set prior to the service and billing periods o Therefore, designed to match estimated costs with estimated revenues  Actual costs and revenues fluctuate, to different degrees, with actual production and sales
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