2. In determining rates, regulators must determine the revenue requirement. 2. (10 points) Provide and explain the formula for the revenue requirement, including an explanation of how the regulator determines the rate of return in the formula. b. (10 points) Referring to the RoR formula, explain whether or not utilities have an incentive to encourage energy conservation. c. Graduate students only: (10 points) Regulators replace the RoR formula with an incentive-based formula that includes a sharing parameter. Show the formula, and use it to explain whether or not the electric utility has an incentive to reduce costs over time. 2. In determining rates, regulators must determine the revenue requirement. 2. (10 points) Provide and explain the formula for the revenue requirement, including an explanation of how the regulator determines the rate of return in the formula. b. (10 points) Referring to the RoR formula, explain whether or not utilities have an incentive to encourage energy conservation. c. Graduate students only: (10 points) Regulators replace the RoR formula with an incentive-based formula that includes a sharing parameter. Show the formula, and use it to explain whether or not the electric utility has an incentive to reduce costs over time