Natural gas vehicles, utilizing a domestic fuel source that is abundantly available, are cleaner burning than gasoline and diesel powered vehicles, and play an important role in pursuing America’s environmental and energy security goals. AGA seeks to advance the use of natural gas in the transportation market and recognizes that a well designed rate mechanism can further that goal. This presentation provides an overview of the LDC ratemaking and rate design process; presents the fundamental concepts and principles of cost of service studies; and identifies key considerations in designing natural gas vehicle rates.