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Residential Fixed and Demand Charge Trends in the US

This report analyzes the recent trends in residential fixed and demand charges across US utilities. Find out the proposed and approved increases, decision outcomes, and overall trends in rate design.

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Residential Fixed and Demand Charge Trends in the US

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  1. Rate Design Matters… A Lot Autumn Proudlove Senior Policy Analyst NC Clean Energy Technology Center Solar Power International September 14, 2016 DC

  2. Residential Rate Design Action: Q1 & Q2 2016 DC Q1 or Q2 2016 action No recent action Utilities in 30 States + DC took action on residential fixed charges or demand charges

  3. Fixed Charges • A fixed charge - also known as a “customer charge” – is typically a flat monthly fee on a customer’s bill. • Fixed charges may also be tiered (different fee based on usage bracket) or a flat fee per day. • Fixed charges can typically not be offset by net metering credits.

  4. Q2 2016 Proposed Increases to Residential Fixed Charges Customer Credits for Monthly Net Excess Generation (NEG) Under Net Metering DC No Proposed Fixed Charge Increase in Q2 2016 Pending Fixed Charge Increase in Q2 2016 42 Utilities in 25 States + DC had pending or decided requests to increase residential fixed charges during Q2 2016 Decision on a Fixed Charge Increase in Q2 2016

  5. Fixed Charge Increases: Q2 2016 • 42 utilities in 25 states + DChad pending or decided proposals to increase residential fixed charges by at least 10% • Median existing fixed charge = $8.25 • Median proposed fixed charge = $13.76 • Median proposed increase = 50% • 6 DECISIONS in Q2 2016: 4 utilities not granted any increase, 2 granted increase below requested amount • NO utilities granted full requested increase

  6. Fixed Charge Trends • Since Q4 2014: • 81 pending or decided proposals to increase fixed charges by at least 10% from • 71 investor-owned utilities across 34 states No Proposed Fixed Charge Increase Pending or Decided Fixed Charge Increase from an IOU Pending or Decided Fixed Charge Increase from a Large Muni or Co-op (>100,000 customers)

  7. Fixed Charge Increase Proposals: %s chronologically  2014 ----- 2016 

  8. Fixed Charge Decisions No Action 46 decisions from Q4 2014 to Q2 2016 No Increase Approved Partial Increase Approved Full Increase Approved

  9. IOU Fixed Charge Decisions Q4 2014 – Q2 2016

  10. Fixed Charge Decisions: Partial Increases [Q4 2014 – Q2 2016] 50% 67%; 40% 75%; 68% CT: 66% 48% 40% MD: 91% 82% 60%; 83% 63% PA: 66% 47% 59% 49% 73% 29% No partial increases granted 1%-24% of requested increase granted 25%-49% of requested increase granted 50%-74% of requested increase granted 75%-99% of requested increase granted

  11. Multiple Requests • 11 utilities have had more than one fixed charge increase request pending since Q4 2014 • 4 initial requests denied, came back & requested smaller increase • 2 initial requests denied, came back & requested larger increase • 4 received partial increases, came back & requested increase larger than first proposal • 1 received full increase, came back & received second partial increase • Some utilities trying again with a smaller request • Others getting a partial increase and trying again with a larger request

  12. Fixed Charge Trends • Not seeing a slowdown in utility requests to increase fixed charges • Very few utilities are being granted their full increase – even split between no increase & partial increase • Those being granted only a partial increase are getting, on average, about 60% of their requested increase

  13. Demand Charges • A demand charge is typically a monthly charge based on a customer’s maximum demand in kW during the billing period. • Demand charges are typically based on a customer’s non-coincident peak demand, but may be designed to be based on coincident peak demand. • Like fixed charges, demand charges cannot typically be offset by net metering credits.

  14. Q2 2016 Proposed Demand Charges on Residential Solar Customers Customer Credits for Monthly Net Excess Generation (NEG) Under Net Metering No Proposed Demand Charge in Q2 2016 Pending Demand Charge in Q2 2016 7 Utilities in 5 States had pending demand charge requests during Q2 2016 Decision on a Demand Charge in Q2 2016

  15. Since Q4 2014: Proposed Demand Charges on Residential Solar Customers Customer Credits for Monthly Net Excess Generation (NEG) Under Net Metering No Demand Charge Proposal Proposed Demand Charge 14 Utilities in 10 States had pending demand charge requests during since Q4 2014

  16. Demand Charges: Decisions • Since Q4 2014 (when we started tracking), no PUC has approved a demand charge on residential solar customers of an IOU. • Only munis and co-ops have implemented demand charges on these customers. • Salt River Project (AZ): $6.95/kW • Lakeland Electric (FL): $4.80/kW • Intermountain Rural Electric Assn. (CO): $4.04/kW • Delaying decisions until broader proceedings are complete • UNS in Arizona • Unitil in New Hampshire

  17. Demand Charge Trends • Very few proposals being put forward right now, but a lot of discussion • No residential demand charges yet approved for investor-owned utilities • Some recent collaborative efforts to reach settlement agreements or efforts to look at the bigger picture before making a decision

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