Designing Electric Utility Rates: Insights on Achieving Efficiency, Equity, and Environmental Goals
Pricing electricity so that it more accurately reflects the costs of its supply and delivery can help achieve efficient and effective mobilization of clean energy resources, more equitable outcomes, and less pollution. Technological innovations, which are changing how the electric grid is managed and operated and how prices can be communicated to electricity customers, offer regulators an opportunity to price and regulate electricity services in new ways. This policy brief aims to help regulators identify a path forward that takes advantage of this opportunity in order to reduce total electricity and environmental costs in ways that are both acceptable and fair. In particular, we urge regulators to use efficiency as a guiding principle in their rate setting in order to achieve cleaner and fairer outcomes.