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Designing Distribution Network Tariffs in the US with an Application to Increased Electric Vehicle Adoption

Author

Listed:
  • Graham Turk
  • Tim Schittekatte
  • Pablo Duenas-Martinez
  • Paul L. Joskow
  • Richard Schmalensee

Abstract

Time-of-use (TOU) tariffs that vary the cost per kWh to reflect wide variations in generation and wholesale market costs give incentives to shift all electric vehicle (EV) charging to low-price periods. As EV penetration increases, such tariffs would substantially raise the local kW demand in those low-priced periods, which eventually would lead to increasing network expansion costs. A straightforward way to mitigate this problem is to separate energy charges from network charges, with appropriate rate designs for each. This paper uses a realistic case study to investigate the implications of combining TOU energy charges with various network tariff designs in the face of increased EV penetration. Our results provide support for the adoption in the US of ex-ante subscribed capacity tariffs (subscription charges), which give consumers incentives to reduce their peak kW demands. Reducing costs of EV ownership (a priority for many US states) need not be pursued at the expense of broader affordability goals. JEL classification: L51, L94, L97, Q41, D40

Suggested Citation

  • Graham Turk & Tim Schittekatte & Pablo Duenas-Martinez & Paul L. Joskow & Richard Schmalensee, 2025. "Designing Distribution Network Tariffs in the US with an Application to Increased Electric Vehicle Adoption," The Energy Journal, , vol. 46(6), pages 143-165, November.
    • Handle: RePEc:sae:enejou:v:46:y:2025:i:6:p:143-165
    DOI: 10.1177/01956574251365616
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    References listed on IDEAS

    as
    1. Hoarau, Quentin & Perez, Yannick, 2019. "Network tariff design with prosumers and electromobility: Who wins, who loses?," Energy Economics, Elsevier, vol. 83(C), pages 26-39.
    2. repec:aen:journl:ej41-1-burger is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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