The Lost Revenue Adjustment Mechanism Explained – NorthWestern Energy Blog

To explain what the LRAM is, we first have to define it. It’s an acronym that stands for Lost Revenue Adjustment Mechanism. It is, in short, an accounting mechanism that allows the company to recover the fixed cost of operating our utility systems when customers use less energy as a result of energy conservation. Fixed costs are the costs of things like meters, power lines, distribution mains, and generating facilities that must be paid regardless of how much electricity or gas our customers use.

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