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Rethinking Standby & Fixed Cost Charges: Regulatory and Rate Design Pathways to Deeper Solar PV Cost Reductions

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Utilities have taken on the practice of applying standby and fixed cost charges specific to solar PV for customers choosing to go solar as a means to recover costs resulting from net energy metering (NEM). These charges are not the most efficient or best means for utilities to recover costs and this report finds that an integrated approach that includes the items below will allow for both effective utility cost recovery and minimal impact on the U.S. PV market. 

· Revenue decoupling, which allows utilities to ensure recovery of their costs, meet investors’ expectations, and encourage customers to save energy;

· A “minimum monthly contribution”, which allows utility to recover a critical degree of revenue from customers who are zero net energy users (often referred to as “prosumers”); and

· Mandatory time-differentiated (also known as time-of-use) pricing, which provides both solar and non-solar customers with transparent utility cost information (and minimizes a significant cost shift benefitting non-solar customers);

 

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NC Clean Energy Technology Center

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