Utilities face unprecedented changes in the way power is generated and delivered. With the ramp-up in distributed generation, energy efficiency and demand response, electric vehicles, smart appliances, and more, the industry must rethink its rate structures to accommodate and encourage these innovations. Progressive rate design can make the difference in cost-eff...

Rate design is the regulatory term used to describe the pricing structure reflected in customer bills and used by electric utilities in the United States. Rate design is not only the itemized prices set forth in tariffs, it is also the underlying theory and process used to derive those prices. Rate design is important because the structure of prices—that is, the form and periodicity of prices for the various services offered by a regulated company—has a profound impact on the choices made by customers, utilities, and other electric market participants. In "Smart Rate Design for a Smart Future," RAP reviews and updates the rate design principles laid out in James Bonbright’s 1961 "Principles of Public Utility Rates," and in Garfield and Lovejoy’s 1964 "Public Utility Economics."