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Effective electricity network tariff design is a powerful tool in the regulator’s toolbox as Europe strives to make energy more secure, sustainable, and affordable. Yet ineffective designs, such as fixed monthly charges, are on the rise in Europe. This is a disconcerting trend, as policy should support, rather than impede, the least-cost transition to clean energy.

Network costs are a significant part of consumers’ bills. Implementing “smart” tariffs that recognise how much, when, and where consumers use the grid will empower them to make informed choices and lower their energy bills, while helping power network companies make better use of existing infrastructure and avoid unnecessary investment.

In a webinar held on 31 January 2018, Christos Kolokathis and Andreas Jahn, co-authors of the paper Cleaner, Smarter, Cheaper: Network tariff design for a smart future delved into the principles of smart tariff design, including:

  • Real-life examples of smart tariff designs;
  • Appropriate tariff design for different consumer classes; and
  • Incentivising judicious investment in grid infrastructure to the benefit of all stakeholders.

Smart tariff design can support the EU goal of providing “a fair deal for consumers” in the Energy Union.