Jim Lazar gave this presentation, “Cost of Service Studies and Rate Design,” to the Pedernales Electric Cooperative Board on October 18, 2011. He discussed the basic principles of cost allocation, the review of methodologies, and the identification of major policy issues for a cost of service study. Mr. Lazar also covered the guiding principles for electric rate design, the development of some illustrative inverted block rate options, and the identification of major policy issues for rate design.