Average Cost Pricing:

The price received by a firm is set equal  to the average total cost of production. The great thing about average-cost pricing is that a regulated public utility is guaranteed a normal profit. One bad thing  about average-cost pricing is that marginal cost is less than average total  cost meaning that price is greater than marginal cost. As such, the public utility is not operating according to the price equals marginal cost (P = MC) rule of efficiency. 

These two types of pricing are shown simultaneously in the following figure.