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// definition

Rate base

Regulated asset base

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Regulated utilities & data centres

Short definition

The value of a utility's property on which the regulator allows it to earn a return. When a line, substation or plant enters the rate base, depreciation and the allowed return are recovered through rates.

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Intuition

The rate base turns an approved investment into tariff revenue: depreciation and return are recovered from customers as the regulator decides.

Formula

revenue requirement = operating expenses + depreciation + taxes + rate of return × rate base

Why it matters now

The data-centre boom forces commissions to decide whether assets built for an absent large load remain with the applicant or enter collective rates.

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