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How Should We Pay for the Grid?

How Should We Pay for the Grid? | GTM Squared | Greentech Media

by Stephen Lacey

October 19, 2016

This is a complimentary episode of our premium podcast, The Interchange. To keep getting this content, become a member of GTM Squared.

We are at the beginning of one of the greatest economic and consumer-behavior experiments ever seen in the energy sector. How do we refine pricing in order to rapidly transition our aging, centralized grid to a clean, decentralized one?

And can we do it so that we limit the economic losses, pay for the fixed costs of operating the grid, and make everyone whole? 

It’s a complicated question. The range of actual rate design options — revenue decoupling, minimum bills, demand charges, fixed charges, and time-of-use rates — offer many varying benefits and drawbacks.

Everyone agrees that we’re moving to a distributed grid. But there’s a lot of disagreement on how to pay for it.

That is what we’re tackling in the show this week. We’re joined by Lisa Wood, the executive director of the Edison Institute for Electric Innovation, and Ralph Cavanagh, a senior attorney with the Natural Resources Defense Council.

Their perspectives on rate design are featured in a new report from the Lawrence Berkeley Lab, called Recovery of Utility Fixed Costs: Utility, Consumer, Environmental and Economist Perspectives. We’re going to discuss their agreements and disagreements on the issue.

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