Social Criteria for Utility Pricing:

Ideally, utility pricing should maintain the following conditions:

1.  Social Efficiency as well as Production Efficiency, i.e. social welfare maximization along with private profit maximization.

2.  Total Cost Recovery.

3.  Fairness or Income Equity through price-output decisions.

4.  Deconcentration of economic power consistent with decentralization of decision-making.  

5.  Natural Resource and Environment Conservation.
 
Note: Alternative Concepts of Full Cost Recovery: 

Here O & M Costs refer to Operating and Maintenance Costs.