A type of research and reporting used to determine the actual costs of providing service to individual customers, groups of customers, or an entire customer base. In the energy industry, cost-of-service analyses are performed at all stages of the supply chain from generation right through to billing. Utilities use these studies to determine what they require in the way of operating capital and what rates they can afford to set for some or all services.
The act of performing a cost-of-service analysis does not necessarily mean that the utility intends to offer cost-of-service pricing. These types of studies are performed by businesses in all service industries as part of standard operating procedure.
See also:cost of service, value of service