The client needed a method for sharing costs among its member power cooperatives. Deregulation in the electric power industry and open market purchases and sales of electric power required adjustments to the cooperative billing methodology and algorithms used to assign costs to the cooperative members.
Mather developed several alternatives for cost sharing and tested the methods under Monte Carlo simulations of the power market. We also used the cost sharing methods to re-allocate costs among the members and compared those cost assignments to the prior method results.
A new cost-sharing methodology was adopted by the client, and they used the new method to re-assign costs from prior quarters that had been distorted by unforeseen market changes.