Power to the prosumer: A transformative utility rate reform proposal that is fair and efficient

Abstract

There is a continuing clash between utilities and proponents of distributed generation, particularly rooftop solar. Generation intermittency, zero-marginal cost energy, and net metering policies associated with solar power make planning, operations, and pricing difficult for utilities. Customers without solar are increasingly concerned they are footing an increasingly larger share of grid costs, while solar customers feel they are not receiving credit for lowering costs for the utility. These pricing issues are caused by an archaic rate structure. We propose that utilities introduce cost-causative rates applied to all customers and adopt transitional methodologies to make a smooth transition between the old and proposed rate structures. Once fully in-place, cost-causative rates will empower customers to increase their own savings while simultaneously reducing costs for others.