Distributional Impacts of Dynamic Pricing Transitions for Residential Electricity Consumers

10 May 2023

We identify the distributional impacts of marginal cost pricing in Hawaiʻi. A unique case, Hawaiʻi exhibits an exceptionally high distributed household solar penetration with extremely powerful historical incentives and exceptionally large retail rates. We pair American Community Survey demographic data with Hawaiian Electric Company advanced metering infrastructure 15-minute import and export data to explore the distributional impacts of dynamic pricing transitions for residential electricity consumers. Focusing on a true marginal cost tariff design exploring both uniform and income weighted fixed charge schemes. We find that marginal cost pricing, in general, increases solar PV customer bills through the new fixed cost mechanism with income weighted fixed charges, in contrast to the $95 uniform charge, alleviating bill increases for households without solar PV.