Article (Scientific journals)
Designing Pareto optimal electricity retail rates when utility customers are prosumers
Saumweber, Andrea; Wederhake, Lars; Cardoso, Gonçalo et al.
2021In Energy Policy, 156, p. 112339
Peer reviewed
 

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Keywords :
Ratemaking; Rate case; Prosumer; Utility; DER-CAM; Pareto optimization
Abstract :
[en] Electric retail rate design is relevant to utilities, customers, and regulators as retail rates impact the utility's revenue as well as the customers' electricity bills. In California, regulators approve rate proposals by privately owned vertical integrated utilities. Approval, however, is subject to compliance with multiple, potentially conflicting objectives such as economic or environmental objectives. Additionally, retail rates are price signals that affect how customers use electricity services. When utility customers change their usage, they also impact the ratemaking objectives to which rates have been designed. This suggests a feedback loop, which is particularly pronounced with prosumers, as they can systematically optimize their interactions with the electricity system. Prevalent ratemaking methods may not deliver retail rates that are optimal for multiple objectives when customers are prosumers. We propose a novel ratemaking method that formalizes the problem of designing retail rates as a multi-criteria optimization problem and accounts for prosumer reactions through a simulation-based optimization approach. Through a fictive case study, we found that the resulting Pareto frontiers are useful in recognizing and balancing tradeoffs among conflicting ratemaking objectives. Additionally, our results indicate that prevailing retail rates in California are not Pareto optimal.
Research center :
- Interdisciplinary Centre for Security, Reliability and Trust (SnT) > Other
Disciplines :
Management information systems
Energy
Author, co-author :
Saumweber, Andrea
Wederhake, Lars
Cardoso, Gonçalo
FRIDGEN, Gilbert  ;  University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Heleno, Miguel
External co-authors :
yes
Language :
English
Title :
Designing Pareto optimal electricity retail rates when utility customers are prosumers
Publication date :
2021
Journal title :
Energy Policy
ISSN :
0301-4215
Volume :
156
Pages :
112339
Peer reviewed :
Peer reviewed
Focus Area :
Security, Reliability and Trust
FnR Project :
FNR13342933 - Paypal-fnr Pearl Chair In Digital Financial Services, 2019 (01/01/2020-31/12/2024) - Gilbert Fridgen
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