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A Rate Design to Increase Efficiency and Reduce Revenue Requirements

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  • Boonin, David Magnus

Abstract

One decoupling approach, a Straight Fixed Variable (SFV) rate design, is a rational way to recover fixed and variable costs because it aligns pricing with variable and fixed cost causation, thereby removing the utility's profit sensitivity to reduced sales. The problem with SFV is that it reduces the variable charge to short-term variable cost, leading to overconsumption. Revenue-neutral energy efficiency "feebates" combining fees and rebates offer an economic incentive for consumer energy efficiency.

Suggested Citation

  • Boonin, David Magnus, 2009. "A Rate Design to Increase Efficiency and Reduce Revenue Requirements," The Electricity Journal, Elsevier, vol. 22(4), pages 68-78, May.
    • Handle: RePEc:eee:jelect:v:22:y:2009:i:4:p:68-78
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    Cited by:

    1. Mahlia, T.M.I. & Tohno, S. & Tezuka, T., 2013. "International experience on incentive program in support of fuel economy standards and labelling for motor vehicle: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 18-33.

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