Tariff Design

Introduction

Tariff design or rate design refers to the relationships among the individual prices the operator charges.¹ Tariff design is different from most other regulatory issues in that it is one topic area where the interests of the operator and the interests of the government often coincide. This section describes situations where this is likely to hold so that the government can do no better than to permit the operator to choose its own tariff design. Also noted are situations where regulation of tariff design might be desirable. Various tariff design options and their properties are then examined, followed by pricing for the poor,² pricing in competitive situations,³ and demand forecasting.⁴ Following this section’s narrative is a list of references, organized by topic.

Footnotes

1. The section on Price Level Regulation examines how to set the overall price level.
2. The reference section on Revenue Caps also covers issues of service to the poor.
3. The reference section regarding Approaches to Competition examines other issues related to competition in the market.
4. The reference section for Basic Financial Statements also examines issues related to demand forecasting.