IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v117y2018icp184-197.html
   My bibliography  Save this article

Pricing the transition: Empirical evidence on the evolution of electricity rate structures in North America

Author

Listed:
  • Langlois-Bertrand, Simon
  • Pineau, Pierre-Olivier

Abstract

Over recent years, utilities supplying the residential electricity sector have struggled with a growing discrepancy between revenues and costs. The increasing share of fixed costs became difficult to recover through traditional rate structures, based on volumetric pricing. This trend is exacerbated by the increase in distributed and intermittent generation from renewable sources, and by changes in demand profiles. This study asks whether utilities across North America are adapting to these changes and taking advantage of dynamic pricing tools and demand response technologies, by taking stock of common tariffing practices to see if utilities do implement rates better tailored to support these transformations. We look at the U.S. Energy Information Administration's national survey, and then refine our analysis with 31 cases across North America. By looking at utilities’ current rate practices with regard to dynamic pricing, distributed generation, the integration of new technologies, demand response possibilities, as well as electric vehicle recharge, this exploration makes it clear that a large majority are not ready for these challenges and must innovate rapidly. Moreover, regulatory agencies must ensure that utilities do have the option of designing rates that move away from volume-based pricing and allow for the deployment of sophisticated demand response management.

Suggested Citation

  • Langlois-Bertrand, Simon & Pineau, Pierre-Olivier, 2018. "Pricing the transition: Empirical evidence on the evolution of electricity rate structures in North America," Energy Policy, Elsevier, vol. 117(C), pages 184-197.
    • Handle: RePEc:eee:enepol:v:117:y:2018:i:c:p:184-197
    DOI: 10.1016/j.enpol.2018.03.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518301356
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.03.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fares, Robert L. & King, Carey W., 2017. "Trends in transmission, distribution, and administration costs for U.S. investor-owned electric utilities," Energy Policy, Elsevier, vol. 105(C), pages 354-362.
    2. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Öhrlund, Isak & Schultzberg, Mårten & Bartusch, Cajsa, 2019. "Identifying and estimating the effects of a mandatory billing demand charge," Applied Energy, Elsevier, vol. 237(C), pages 885-895.
    2. Javier Borquez & Hector Chavez & Karina A. Barbosa & Marcela Jamett & Rodrigo Acuna, 2020. "A Simple Distribution Energy Tariff under the Penetration of DG," Energies, MDPI, vol. 13(8), pages 1-17, April.
    3. Beaufils, Timothé & Pineau, Pierre-Olivier, 2019. "Assessing the impact of residential load profile changes on electricity distribution utility revenues under alternative rate structures," Utilities Policy, Elsevier, vol. 61(C).
    4. Timothé Beaufils & Pierre-Olivier Pineau, 2018. "Structures tarifaires et spirale de la mort : État des lieux des pratiques de tarification dans la distribution d’électricité résidentielle," CIRANO Working Papers 2018s-27, CIRANO.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    2. Ingrid Ott & Stephen J. Turnovsky, 2006. "Excludable and Non‐excludable Public Inputs: Consequences for Economic Growth," Economica, London School of Economics and Political Science, vol. 73(292), pages 725-748, November.
    3. Andrew B. Whitford & Derrick Anderson, 2021. "Governance landscapes for emerging technologies: The case of cryptocurrencies," Regulation & Governance, John Wiley & Sons, vol. 15(4), pages 1053-1070, October.
    4. Acocella Nicola & Di Bartolomeo Giovanni, 2013. "Population location, commuting and local public goods: A political economy approach," wp.comunite 0105, Department of Communication, University of Teramo.
    5. Kverndokk, Snorre & Figenbaum, Erik & Hovi, Jon, 2020. "Would my driving pattern change if my neighbor were to buy an emission-free car?," Resource and Energy Economics, Elsevier, vol. 60(C).
    6. Cornes Richard & Sandler Todd, 2000. "Pareto-Improving Redistribution and Pure Public Goods," German Economic Review, De Gruyter, vol. 1(2), pages 169-186, May.
    7. David Kelsey & Frank Milne, 2006. "Externalities, monopoly and the objective function of the firm," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(3), pages 565-589, November.
    8. Matteo Migheli & Giovanni B. Ramello, 2014. "Open Access Journals & Academics’ Behaviour," ICER Working Papers 03-2014, ICER - International Centre for Economic Research.
    9. Wiktor Adamowicz & Mark Dickie & Shelby Gerking & Marcella Veronesi & David Zinner, 2014. "Household Decision Making and Valuation of Environmental Health Risks to Parents and Their Children," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 481-519.
    10. John B. Loomis, 2013. "Incorporating distributional issues into benefit–cost analysis: why, how, and two empirical examples using non-market valuation," Chapters, in: Scott O. Farrow & Richard Zerbe, Jr. (ed.), Principles and Standards for Benefit–Cost Analysis, chapter 9, pages 294-316, Edward Elgar Publishing.
    11. Wolfgang Buchholz & Wolfgang Peters, 2007. "Justifying the Lindahl solution as an outcome of fair cooperation," Public Choice, Springer, vol. 133(1), pages 157-169, October.
    12. Clemens Heuson & Wolfgang Peters & Reimund Schwarze & Anna-Katharina Topp, 2015. "Voluntary International Climate Finance Under The Post-Kyoto Framework: The Strategic Consequences Of Different Modes Of Funding," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-26.
    13. Mr. Kenneth Rogoff & Yuanchen Yang, 2022. "A Tale of Tier 3 Cities," IMF Working Papers 2022/196, International Monetary Fund.
    14. Hikaru Ogawa, 2010. "Fiscal Competition among Regional Governments - Tax Competition, Expenditure Competition and Externalities -," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(1), pages 1-30, February.
    15. Albert N. Honlonkou & Rashid M. Hassan, 2015. "Developing Countries' Response To The Clean Development Mechanism Under Imperfect Information And Transaction Costs," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(01), pages 1-22.
    16. Wolfgang Buchholz & Wolfgang Peters, 2001. "The overprovision anomaly of private public good supply," Journal of Economics, Springer, vol. 74(1), pages 63-78, February.
    17. Todd Sandler, 2010. "Common-property resources: privatization, centralization, and hybrid arrangements," Public Choice, Springer, vol. 143(3), pages 317-324, June.
    18. al-Nowaihi, Ali & Fraser, Clive D., 2007. "Is the public sector too large in an economy with club goods? A case when consumers differ in both tastes and incomes," Economic Modelling, Elsevier, vol. 24(6), pages 1018-1031, November.
    19. Malte Hückstädt, 2022. "Coopetition between frenemies–interrelations and effects of seven collaboration problems in research clusters," Scientometrics, Springer;Akadémiai Kiadó, vol. 127(9), pages 5191-5224, September.
    20. Huffman, Wallace E., 2001. "Human capital: Education and agriculture," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 7, pages 333-381, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:117:y:2018:i:c:p:184-197. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.