Marginal cost pricing: is it deficient

The author of this article, having spent numerous years in analyzing cost-of-service and rate-design studies for electric and gas utilities, believes that it is about time that people stop kidding themselves with analyses of marginal costs (guessing marginal costs for new units that will never be commissioned) which already consist of so many deficiencies. He feels we should concentrate our efforts on performing and improving the quality of time-of-use embedded cost-of-serivce studies, the only tool which should be used in setting cost-based rates for different times of the year.