Trade-Offs between Private and Social Benefits for Electricity Rate Design
*Names in bold indicate Presenter
We intend to address this question in both theoretical and empirical terms. This work-in-progress is developing theoretical models to represent the rate-payer, utility, and regulator perspectives. Initial work is focused on model development for economic efficiency with solar technology. Social benefit is estimated in terms of reduced system cost (based on locational marginal price) and private benefit is estimated in terms of reduced utility bills. Rate-payers desire to minimize their bills while meeting their energy needs, the utility is responsible for meeting all rate-payers’ energy needs and paying system costs, and the regulator aims to minimize rate-payer burden while assuring the utility is able to achieve a reasonable rate of return.
Based on this work, we intend to derive new principles for electric rate design that are theoretically and empirically motivated. In addition, this work lays a foundation for future experimental work related to the impacts of technology stacking, location-specific incentives, and consumer choice.