Time-varying rates from the get-go – not just by opt-in.
Ahmad Faruqui, Ryan Hledik, and Neil Lessem are economists with The Brattle Group, based in San Francisco. They would like to thank their colleague Sanem Sergici for her thoughtful comments on earlier drafts of this paper. Many other reviewers also read previous drafts. The views expressed in the paper are not necessarily those of Brattle. Comments can be directed to email@example.com.
About a third of U.S. households are now receiving electric service through smart meters but only two percent are buying the energy portion of their electric bill on a time-varying rate, or TVR. As we look at the future, it is clear that the number of customers with smart meters will continue to grow while the number of customers on TVRs will continue to stagnate. (TVRs come in several forms. For definitions of some of the more commonly used TVRs - , CPP, PTR, TOU, and VPP - see sidebar, "Common Forms of Time-Varying Rates.")
It is possible that nearly all U.S. households will be on smart meters sometime during the next decade. But how many will buy electricity through a TVR? Unfortunately, if the current regulatory logjam persists, that percentage is not likely to enter double digits any time soon.1