ORIGINAL REPORTING: New rate designs are showing the way to a modern grid

Is a residential three-part rate the way to a modern grid or bad news for utility customers? Policymakers struggle toward common ground on new rate designs

Herman K. Trabish, March 13, 2018 (Utility Dive)

Editor’s note: Work on new rates that will align customer demand and system needs is accelerating from Hawaii to Maine.

Rising penetrations of energy efficiency (EE) and other distributed energy resources (DER) are adding to the downward pressure on utility revenues by allowing customers to generate their own electricity or reduce their usage. Utilities find themselves caught between their customers' demand for DER and their own need to cope with reduced electricity sales.They are responding with requests to utility regulators for rate increases that slow the DER growth. “Forging a Path to the Modern Grid: Energy-Efficient Opportunities in Utility Rate Design,” released in February by the Alliance to Save Energy (ASE), proposes a different solution. ASE developed principles and recommendations under a Rate Design Initiative, with price signals to guide customer-sited EE and DER to when and where utilities need them.

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Utilities say such rate designs could work if the outcome is revenues that match their costs to serve customers. Rate design experts agree that price signals might meet the challenge — if they are specific enough. To slow the growth of energy efficiency and other DER, many utilities have asked regulators for higher fixed residential customer charges and demand charges that deliver revenues regardless of a customer's kWh consumption, according to Autumn Proudlove, manager of policy research for the North Carolina Clean Energy Technology Center (NCCETC). Regulators have largely rejected these utility proposals, which suggests they expect “something better,” Proudlove said. ASE used ideas from the wide range of stakeholders in its Rate Design Initiative to provide something better in the form of a new rate design… click here for more

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