Special CUB Conference Preview: Rate Design for the New Reality
Posted on October 4, 2016 by Liz Jones
Tags, Conference & Events
We are less than two weeks out from the sixth annual CUB Policy Conference, The Future Starts Now, taking place at the Downtown Portland Hilton on Friday October 14. Our Early Bird deadline has passed, but you can still register online for the conference until Tuesday, October 11. To give readers a sense of the discussions that will take place, we are previewing each of our breakout sessions here on the CUB blog. Today’s update focuses on the afternoon session topic “A Brave New World: Rate Design for the New Reality”.
In its basic form, “rate design” is the process of establishing rates that allow a utility to recover its cost of service for each customer class and earn a reasonable rate of return through rates that are fair, simple, and transparent. Simple enough, right? But the current debates around rate design are anything but simple and raise numerous nuanced questions. How can rates be designed to best encourage efficiency? What design mechanisms can be used to integrate renewable energy onto the system and encourage distributed generation? What is the appropriate balance between recovery through fixed versus variable charges? Should residential energy charges differ based on peak usage?
Our knowledgeable panelists have promised to fully “nerd out” and address these and other key rate design issues. Our panelists represent varied backgrounds and perspectives, and we expect a lively discussion on a number of rate design components including: customer charges, particularly in relation to net metering customers; time of use prices; and demand charges.
Across the country utilities are pushing for changes to net metering programs, arguing that net metering customers take more from the system than they contribute and should therefore be subject to higher fixed charges. Proponents of net metering see such changes as just another tactic in the utilities’ “solar wars.” We will discuss with our panel whether changes to net metering are in fact warranted, and whether the “solar wars” are coming to Oregon.
It has been argued that setting rates that vary based on the customers’ time of use is a highly effective mechanism to integrate solar energy onto a utility’s system. Perhaps less discussed is the potential impact time-of-use rates may pose to low-income customers. Panelists will be asked how those concerns can be balanced against the desire to send appropriate price signals to residential customers.
Finally, demand charges based on a customer’s individual peak usage have commonly been used to recover costs from commercial and large industrial customers. Some believe that, with the arrival of smart meters, residential customers should also be subject to demand charges. The panel will consider what role, if any, demand charges should play in residential rate design.
Joining us to discuss these complex issues will be Bob Jenks, CUB Executive Director; Carl Linvill, Principal at the Regulatory Assistance Project; Lisa Schwartz, Energy Efficiency Team Leader in the Electricity Markets and Policy Group at Lawrence Berkeley National Lab; and Joelle Steward, Director of Rates and Regulatory Affairs at PacifiCorp.
Supplemental reading materials on rate design issues have been made available by the Lawrence Berkeley Lab; you can find links, along with other reading materials, here.
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12/27/16 | 0 Comments | Special CUB Conference Preview: Rate Design for the New Reality