investigating the effect of tariff revision process on electricity retail tariff and utilities death spiral

The accelerating deployment of distributed energy resources (ders) is eating away at electric utilities sales and revenues. it is feared that attempting to recover their lost revenue through raising tariffs may trap utilities in a death spiral. in this paper, the interaction between utilities, consumers, and ders is modeled using system dynamics (sd) to investigate the impact of distributed renewable resources on utilities. furthermore, a new model for electricity tariff revision has been developed that captures regulatory and organizational delays. the model has been simulated with the latest available data and sensitivity analysis has been carried out for important parameters. results suggest that while the death spiral is not an immediate threat under normal conditions, the delay in price revision can introduce considerable fluctuation in electricity tariff, which worsens when the delay increases. another outcome of this study is that population growth has the potential to mitigate the effects of death spiral. on the flip side, utilities serving areas with a low rate of population growth, such as europe, face a more significant threat from distributed resources.

investigating the effect of tariff revision process on electricity retail tariff and utilities death spiral

the accelerating deployment of distributed energy resources (ders) is eating away at electric utilities sales and revenues. it is feared that attempting to recover their lost revenue through raising tariffs may trap utilities in a death spiral. in this paper, the interaction between utilities, consumers, and ders is modeled using system dynamics (sd) to investigate the impact of distributed renewable resources on utilities. furthermore, a new model for electricity tariff revision has been developed that captures regulatory and organizational delays. the model has been simulated with the latest available data and sensitivity analysis has been carried out for important parameters. results suggest that while the death spiral is not an immediate threat under normal conditions, the delay in price revision can introduce considerable fluctuation in electricity tariff, which worsens when the delay increases. another outcome of this study is that population growth has the potential to mitigate the effects of death spiral. on the flip side, utilities serving areas with a low rate of population growth, such as europe, face a more significant threat from distributed resources.