The Bill Alignment Test: Identifying Trade-Offs with Residential Rate Design Options

Christina Simeone, Pieter Gagnon, Peter Cappers, Andrew Satchwell

Research output: Contribution to journalArticlepeer-review

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.

Original languageAmerican English
Article number101539
Number of pages15
JournalUtilities Policy
Volume82
DOIs
StatePublished - Jun 2023

Bibliographical note

Publisher Copyright:
© 2023 Elsevier Ltd

NREL Publication Number

  • NREL/JA-6A40-83054

Keywords

  • Electric utility regulation
  • Rate design
  • Residual cost allocation
  • Smart meter data

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