Seeking a rate design that recovers costs fairly from customers with rooftop solar.
Mark Lively provides consulting services for pricing of electricity and natural gas, through his firm, Utility Economic Engineers. Reach him at MbeLively@aol.com. Lori Cifuentes is Manager of Load Research and Forecasting for Tampa Electric Co. Reach her at llcifuentes@tecoenergy.com.
In the U.S., most residential customers of electric utilities are on a consolidated tariff that collects revenue based on a fixed monthly fee (often called a customer charge) and a commodities charge (an energy or kWh charge). The fixed monthly fee is generally designed to recover metering and billing expenses. The commodities charge is designed to recover expenses associated with the supply of both energy (kWh) and demand (peak kW).
For electricity, fuel costs are a large component of the energy expense. Fixed costs related to the infrastructure investment to provide central station service to the customer are a large component of the demand expense. However, there is often disagreement about whether some of the traditionally classified energy costs should be reclassified as demand and vice versa.
The growth of rooftop solar is dramatically reducing the amount of energy that goes through residential utility meters from the utility to the customer. Indeed rooftop solar often reverses the flow, such that many rooftop solar residential customers deliver energy to the local wires company during some periods of the day. In Washington, D.C., the mayor has a vision to reduce energy consumption by 50% and to have 50% of the remaining energy produced by rooftop solar.