In a new study titled “Distributional and Welfare Impacts of Dynamic Pricing for Commercial and Industrial Electricity Users: Evidence from Oʻahu, Hawaiʻi,” UHERO Fellow Nori Tarui and UHERO alum Asahi Oshiro explore the consequences of transitioning from constant volumetric pricing with demand charges to dynamic pricing for commercial and industrial (C&I) electricity users. The study, based on hourly electricity consumption data from Oʻahu, reveals that while demand charges may not significantly reduce system-wide peaks, their removal leads to substantial distributional impacts and efficiency gains. A key insight is that the nature of rate reforms, whether regressive or progressive, hinges on the allocation of fixed charges across users. This research provides valuable insights for policymakers and industry experts grappling with designing equitable and efficient electricity pricing strategies, particularly in the context of the global shift towards sustainable energy solutions.
Oshiro, Asahi, and Nori Tarui. “Effects of alternative pricing structures on electricity consumption and payments in the commercial and industrial sector.” Japan and the World Economy (2023): 101223.
