Energy regulators engage in a complex balancing act of many, at times, competing objectives—crafting a plan to comply with the U.S. Environmental Protection Agency’s Clean Power Plan, strategically deploying grid resources, encouraging energy efficiency, addressing climate change, while also ensuring fairness, universal access, and social justice. In markets increasingly influenced by customer-sited resources and automation technology, traditional rate design works at cross-purposes with these goals. In the first part of a two-day workshop for the New Jersey Board of Public Utilities, Richard Sedano and David Littell described rate design options that work in harmony with these changes in the power sector. Three principles make up the foundation of smart rate design. First, customers connecting to the grid should only pay for the actual cost of connecting to the grid. Second, they should pay for grid services in proportion to the amount they use and the time of use. Third, customers supplying power to the grid should be compensated fairly for the value of the power they supply. Effective rate design recognizes that customers can be a valuable resource, especially with technology developments that support best practices, such as time-of-use rates, critical peak pricing, and the value of solar tariff.