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The bill alignment test: Identifying trade-offs with residential rate design options

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  • Simeone, Christina E.
  • Gagnon, Pieter
  • Cappers, Peter
  • Satchwell, Andrew

Abstract

The proliferation of smart meter data allows the application of new analytic methods to inform regulatory deliberations. The bill alignment test (BAT) method, which compares the costs allocated to each residential customer with their electric bill, is introduced to help regulators consider how a proposed rate design balances various regulatory criteria. The BAT requires an explicit statement of preferences by policymakers or stakeholders and choices about allocating residual costs unassociated with customer-level causality. The BAT is applied to more than 35,000 smart-meter customer load profiles to assess the trade-offs associated with proposed rate designs. This example demonstrates the impact of residual cost allocation preferences and tariff design choices on proposed tariff evaluation.

Suggested Citation

  • Simeone, Christina E. & Gagnon, Pieter & Cappers, Peter & Satchwell, Andrew, 2023. "The bill alignment test: Identifying trade-offs with residential rate design options," Utilities Policy, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:juipol:v:82:y:2023:i:c:s0957178723000516
    DOI: 10.1016/j.jup.2023.101539
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    References listed on IDEAS

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    1. Wang, Yishi & Jin, Andrew S. & Sanders, Kelly T., 2026. "A systematic review of literature utilizing residential smart meter data," Renewable and Sustainable Energy Reviews, Elsevier, vol. 225(C).
    2. Gorman, Will & Barbose, Galen & Baik, Sunhee & Miller, Cesca & Carvallo, Juan Pablo, 2025. "Backup power or bill savings? How electricity tariffs impact residential solar-plus-storage usage in the United States," Utilities Policy, Elsevier, vol. 96(C).

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