Electricity Tariffs

Abstract

This chapter defines the theoretical objectives that regulation should pursue in electricity tariff design (also called ratemaking) and introduces the reader to the issues surrounding that task. Satisfactory tariff design is essential both to promote optimal short-term system usage and to guide efficient long-term demand response. This is because sound electricity tariffs convey information on responsibility in the incurred supply costs to the actors involved. The design of electricity rates is, then, of major importance both in liberalised and traditionally regulated systems. © Springer-Verlag London Limited 2013.