Utility ratemaking is the formal regulatory process in the United States by which public utilities set the prices (more commonly known as "rates") they will charge consumers. Ratemaking, typically carried out through "rate cases" before a public utilities commission, serves as one of the primary instruments of government regulation of public utilities.

Historically, many different classes of business have been classified as public utilities, and thus have been legally mandated to go through the ratemaking process in order to determine the allowable service charges for their industry. Although the classification of public utilities has changed over time, typically such businesses must constitute a de facto monopoly (or "natural monopoly") for the services they provide within a particular jurisdiction. Prominent public utilities that must utilize ratemaking to set rates include railroads, natural gas distribution, telecommunications, and electricity generation and distribution.

In the United States, where many industries classified as public utilities are either private businesses or publicly traded corporations, ratemaking is typically carried out through the authority of a state regulatory body, most often a public utilities commission in an administrative law format. At the national level the Federal Energy Regulatory Commission (formerly the Federal Power Commission) also exercises authority over matters of intrastate wholesale sales of electric power.

Ratemaking has an economic dimension because it attempts to set prices at efficient (nonmonopolistic, competitive) levels. Ratemaking is political because the product is determined to be a social necessity and rates must be fair across different classes of consumers. Additionally, ratemaking can be designated to serve other social purposes. Although it can be said that all regulation is a combination of politics and economics, ratemaking is frequently more technical. Ratemaking has five functions:

These regulatory goals can conflict. When prices are kept below market, efficiency suffers. When prices exceed the market, prices may not be reasonable. Both events have occurred during the history of utility regulation. The above goals attempt to serve the interests of the utility, its shareholders, consumers, and the general public. To be constitutional, a rate cannot be so high as to be confiscatory. Most state statutes further require rates to be just, reasonable, and non-discriminatory.

Although utilities are regulated industries, they are typically privately owned and must therefore attract private capital. Accordingly, because of constitutional takings law, government regulators must assure private companies that a fair revenue is available in order to continue to attract investors and borrow money. This creates competing aims of capital attraction and fair prices for customers. Utility companies are therefore allowed to charge "reasonable rates," which are generally regarded as rates that allow utilities to encourage people to invest in utility stocks and bonds at the same rate of return they would in comparable non-regulated industries.

State laws typically restrict utilities from large, sudden rate increases. Utilities should implement new rates over time so that consumers and business can adapt to the changing prices. This is known as the principle of gradualism.

The price of a utility's products and services will affect its consumption. As with most demand curves, a price increase decreases demand. Through a concept known as rate design or rate structure, regulators set the prices (known as "rates" in the case of utilities) and thereby affect the consumption. With declining block rates, the per-unit price of utility consumption decreases as the energy consumption increases. Typically a declining block rate is offered only to very large consumers. If conservation is the goal, regulators can promote conservation by letting prices rise. A third possible rate design is a flat rate which charges the same price for all consumption.