Rate Design as a Compliance Strategy for the EPA's Clean Power Plan
States can meet their obligations to the new Clean Power Plan (CPP) with a variety of tools, from shifting generation to developing lower-carbon resources to making energy efficiency investments. One often-overlooked way to comply with the CPP, however, is electricity rate design. A design that encourages wise use of electricity, compared with a rate that gives customers a disincentive to conserve, can represent as much as a 15 percent swing in residential customer usage. This paper offers examples of how progressive rate designs can lead to reduced emissions and thus ease the way to CPP compliance. Jurisdictions that adopt rate designs with higher fixed charges, offset by lower kWh prices, may instead see higher usage, higher emissions, and a more difficult path to meeting their obligations.