Options for change: Restructuring California's residential inclining rates for a better electricity future

C. K. Woo, A. Tishler, K. H. Cao*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Local distribution companies (LDCs) regulated by the California Public Utilities Commission use mandatory inclining rates (MIR) to bill their residential electricity customers. However, MIR hinder the California electricity industry's provision of clean and reliable service at affordable rates. Hence, we consider the following options to restructure MIR: (1) adopting a flat energy rate and revised customer charges; (2) replacing the flat rate in (1) with time-of-use (TOU) rates; (3) replacing the TOU rates in (2) with real-time pricing; (4) replacing (3) with a Hopkinson tariff with reliability differentiation. Our assessment of these options recommends sequential implementation (1), (2) and (4), thus lessening the potentially large and adverse bill impacts on some residential end-users caused by a drastic rate design change. Our recommended implementation sequence is (2) and (4) when the potentially large bill impacts of TOU pricing on the small and poor end-users with relatively high peak kWh consumption are to be mitigated by income-based customer charges.

Original languageEnglish
Article number107234
JournalElectricity Journal
Volume36
Issue number1
DOIs
StatePublished - 1 Jan 2023

Funding

FundersFunder number
Education University of Hong Kong

    Keywords

    • California
    • Hopkinson tariff
    • Mandatory inclining rates
    • Marginal cost pricing
    • Residential rate restructure
    • Time of use rates

    Fingerprint

    Dive into the research topics of 'Options for change: Restructuring California's residential inclining rates for a better electricity future'. Together they form a unique fingerprint.

    Cite this