Generation capacity from distributed renewable energy sources (D-RES) is rapidly increasing in many regions. Alongside this change in infrastructure within the distribution grid, a change in economics within tariff design is necessary. Tariffs have previously been simple, yet complex mechanisms are required to accurately pay for D-RES generation and transfer costs to end-users. Moreover, tariffs depend on metering infrastructure (advanced or legacy) and setup (metering generation and consumption separately or together). Using residential household consumption and generation data from Austin, Texas, USA, we quantify the cross-subsidies inherent in conventional tariffs and compare them with newer tariff designs that require advanced metering infrastructure (AMI), including two-tiered Time-of-Use, Real-Time Pricing, and Demand Charge tariffs. Conventional tariffs, which use legacy metering infrastructure, create median cross-subsidization values that are 2 to 3 orders of magnitude larger than those of tariffs dependent on AMI, except for the Demand Charge tariff, which falls in between other AMI tariffs and non-AMI tariffs in cross-subsidies. Unlike this difference between non-AMI and AMI tariffs, we find little benefit from metering generation separately from consumption. This work quantifies an important factor in the economic efficiency of tariffs and provides guidance for the policy debate surrounding tariff design.

Additional Metadata
Keywords Electricity Tariffs, Smart Meters, Distributed Generation, Cross-subsidies
Persistent URL
Ansarin, M, Ghiassi-Farrokhfal, Y, Ketter, W, & Collins, J. (2019). Cross-subsidies Among Residential Prosumers from Tariff Design and Metering Infrastructure. Retrieved from