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Rate design for electric utility customers is an arcane topic that matters a lot. Rate design represents the price signals consumers use to guide their consumption and investment choices. Just as customers choose groceries, gasoline, or plane tickets in part based on the price for the time and quantity they need, they also choose when and how much electricity to consume based on price.

There is no one-size-fits-all approach to rate design. However, all effective rate designs reflect the costs incurred to provide reliable service throughout the year, and may include the cost of additional generating plants, new transmission lines, distribution transformers, or increased fuel usage.

In the first of a two-part webinar series, Jim Lazar and Janine Migden-Ostrander explore the fundamental principles of electric utility rate design and demonstrate the impacts of different rate designs on energy usage and low-income customers. Topics include:

  • Revenue requirements
  • Cost allocation
  • Rate design options, including declining block, inclining block, time of use, and seasonal rate designs
  • Monthly fixed vs. usage-related charges
  • Differences between residential and commercial rates
  • Special treatment of particular customer groups, including low-income consumers, electric vehicle charging, and electric heat customers

This webinar is the first in a 2-part series on key elements of rate design. The second session Cost Allocation – The Transition from Costs to Rates followed on November 14, 2014.

Additional materials on rate design are available in the “More on This Topic” section at the right and in the Knowledge Center, along with previous webinars on rate design: