ACEE explores the relationship between changes in residential rate design and energy efficiency, focusing on how recently proposed rate structures alter customer behavior through a review of recent pricing studies across the country.
- Scenarios with the lowest payback periods have lower customer charges, tiered or flat rates, and TOU rates
- Scenarios with the longest payback periods are those with higher customer charges (more than $25 per month) and demand charges.
- Utilities should focus on targeting and recognizing the customers that will be negatively impacted by rate changes to protect vulnerable populations (low-income) from large rate increases or to assist them with these increases if they occur.
- Only customer-specific costs (such as bill and collection) and adopting time-varying rates (specifically, a TOU rate with a CPP or PTR element) comes closest to meeting ACEEE’s three principles of rate design: price signals that encourage conservation and energy efficiency, simplicity, and utility revenue stability.