New interest in energy efficiency and demand response calls for a renewed push for more efficient electricity pricing structures. Furthermore, a thorough understanding of marginal cost pricing and its benefits provides a valuable starting point for rate design, even if other information is incorporated as well. With this in mind, NERA held its 2007 Marginal Cost Pricing course in Redondo Beach, California on 9-11 July. Taught each year by NERA Affiliated Consultant Dr. Hethie Parmesano and Vice President Amparo Nieto, the course is designed for utility and regulatory personnel.

This year's course provided both theoretical background on alternative approaches to using marginal costs to set electricity prices and hands-on practice in developing a set of marginal cost-based prices. The course included a brief overview of marginal cost calculations, and new material and exercises on the details of designing innovative rates, such as critical peak pricing.