Note from the editor Dear readers,
The new year has carried over old challenges from last year for utilities and the solar industry.
How do you design electricity rates that please both sides? In 2013, the Edison Electric Institute's landmark "Disruptive Challenges" paper recommended fixed charges as one way to counteract the so-called utility "death spiral." But after seeing severe backlash against fixed charges from solar advocates, even Peter Kind, author of the EEI report, found the fixed charges approach to be flawed.
Now, other rate design tools, such as residential demand charges and time-of-use pricing, are being discussed as more palatable options. At NARUC’s winter meeting, we saw residential demand charges take the spotlight as thought leaders touted their ability to be “technologically agnostic.” Utilities, like those in Arizona, say they better reflect their fixed costs. Others, however, suggest demand charges could lead to greater load defection as solar owners buy energy storage to avoid costly demand charges.
As the debate over demand charges plays out in Arizona and other states, here at Utility Dive we would like to know what you think. As DERs gain traction and strain the legacy utility model, what's the best rate design tool to balance grid costs and the value of DERs?
Please let me know what you think via email or on Twitter. In the meantime, you can check out my story today on the emergence of residential demand charges as a rate design tool.
Krysti Shallenberger
Associate Editor, Utility Dive
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