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Exploring Sustainable Energy Economics: Net Metering, Rate Designs and Consumer Behavior

  • Energy Policy (P Jaramillo, Section Editor)
  • Published:
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Abstract

Purpose of review

Increasing adoption of renewable energy distributed generation (DG) and concerns over cost shifts and utility cost recovery are motivating new studies on alternative rate designs and policies. We review a growing body of literature on residential rate design, net metering and DG costs/benefits. and consumer behavior to understand what progress published literature has made in addressing public policy concerns in these areas.

Recent Findings

Much of the quantitative focus in these studies has applied to the merit order effect of renewable DG decreasing wholesale electricity prices or the costs of net metering to utilities. However, no studies directly compare these two metrics. One study separates out effects from net metering and DG in a quantitative estimation of cost shift.

Summary

However, there is much opportunity and need for more studies that examine net metering and DG effects separately and through comparison, for a wider variety of policy, regulatory, and geographical contexts. In addition, there is growing evidence to support demand charges as a potential solution, yet the consumer behavior effects of new rate changes need to be thoroughly explored.

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Notes

  1. Existing US utilities that use demand charges include: Alabama Power, Alaska Electric Light & Power (AELP), Arizona Public Service (APS), Black Hills (in South Dakota and Wyoming), Dominion (in Virginia and North Carolina), Duke Energy (in North Carolina and South Carolina), Georgia Power, the Los Angeles Department of Water and Power (LADWP), and Xcel Energy (in Colorado).

  2. Although CA rate structures include a connection charge, independent of energy consumption, in addition to the volumetric charge [12]

  3. Inflation-adjusted to US$2016 using the US Bureau of Labor Statistics Consumer Price Index Inflation Calculator (https://www.bls.gov/data/inflation_calculator.htm) and converted from euros to dollars using historical exchange rates from http://www.wikinvest.com/stock/Infineon_Technologies_(IFX)/Annual_Average_Exchange_Rates_Dollar_Per_Euro (2006, 2007, 2009) and http://www.x-rates.com/average/?from=EUR&to=USD&amount=1&year=2010 (2010).

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Acknowledgements

This work is supported by USDA National Institute of Food and Agriculture, Hatch projects ME 0230040 and ME 021510, and the Senator George J. Mitchell Center for Sustainability Solutions at the University of Maine.

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Authors and Affiliations

  1. School of Economics, University of Maine, 5782 Winslow Hall, Room 206, Orono, ME, 04469, USA

    Sharon J.W. Klein

  2. School of Economics, University of Maine, Orono, ME, USA

    Caroline L. Noblet

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Correspondence to Sharon J.W. Klein.

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Sharon J.W. Klein and Caroline L. Noblet each declare no potential conflicts of interest.

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This article does not contain any studies with human or animal subjects performed by any of the authors.

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This article is part of the Topical Collection on Energy Policy

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Klein, S.J., Noblet, C.L. Exploring Sustainable Energy Economics: Net Metering, Rate Designs and Consumer Behavior. Curr Sustainable Renewable Energy Rep 4, 23–32 (2017). https://doi.org/10.1007/s40518-017-0073-5

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