(Daily Energy Insider)

The Alliance to Save Energy (ASE) published a white paper this week that concludes modernizing the electric grid will require changes in the pricing structures electric utilities use, including moving beyond a traditional two-part rate.

The paper, Forging a Path to the Modern Grid: Energy-Efficient Opportunities in Utility Rate Design, is the product of the Rate Design Initiative, a two-year effort led by ASE and involving representatives from utilities, technology companies, regulatory experts, environmental groups, consumer advocates and other industry leaders.

The initiative sought to identify themes and opportunities related to rate designs that incentivize energy efficiency and other environmental and social objectives, while also enabling adequate cost recovery for utilities.

“Developing utility rates that are fair to all stakeholders is a perennial challenge, but the dramatic shifts happening in our power systems are forcing us to think more creatively,” Natasha Vidangos, director for research at ASE, said. “The old-fashioned cost recovery and rate design models we’ve traditionally used simply don’t match tomorrow’s needs. As an organization that works closely with the wide spectrum of utility sector stakeholders, we took this on to try to identify areas of agreement, opportunity and lessons learned. In rate design, there are rarely simple solutions, but the potential benefits are extraordinary if we get it right.”

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