Pricing Do's and Don'ts: Designing Retail Rates as if Efficiency Counts
Rate design is a crucial element of an overall regulatory strategy that fosters energy efficiency and sends appropriate signals about efficient system investment and operations. Rate design is also fully under the control of state regulators. Progressive rate design elements can guide consumers to participate in energy efficiency programs and reduce peak demand, yet relatively few utilities and commissions have implemented many of these elements. This RAP paper identifies some best practices. Because pricing issues tie closely to utility growth incentives, we also address revenue decoupling.