Definitions for "Revenue Requirement"
Keywords:  expenses, utility, needed, earn, return
The amount of funds (revenue) a utility must take in to cover the sum of its estimated operation and maintenance expenses, debt service and taxes. During the rate-setting process, the calculation of the revenue requirement is compared to revenue produced by current rates to determine whether a rate increase is needed, and if so, to determine the overall size of the increase.
The total amount of money a utility must collect from customers to pay all operating and capital costs, including a fair return on investment. Revenue Requirement = expenses + depreciation + taxes + (rate of return x rate base)
The amount a regulated local exchange carrier is allowed to earn on its rate base. The revenue requirement is the sum of the rate base times rate of return plus operating expenses and taxes.