We are experiencing a moment of both significant change and opportunity within the electricity sector. After over a decade of flat-to-declining load in most of the country, the current load growth projections in many markets nationwide are increasing rapidly. Much of the near-term load growth is from significant capital investment in manufacturing, data center expansion, and electrification. Over the next five years, utilities are anticipating electricity demand to increase by nearly 16 percent. This load growth has started to outpace existing grid planning, procurement, and cost recovery processes. To meet the opportunity and the speed of activity, regulators, utilities, large-load customers, and other stakeholders are now driving innovative solutions to align these processes. One such tool that a growing number of utilities and regulators have turned to is the use of large-load tariffs.

Large-load tariffs — which include special contracts, rates, and service agreements between utilities and large-load customers — are a rapid and flexible tool for bringing new load onto the grid while minimizing the risk to ratepayers. Recent reports from Lawrence Berkeley National Lab and Energy Futures Group cover 16 tariff proceedings across the United States, with more announced  or under utility commission review. These tariffs address issues like the fair allocation of costs between customer groups and typically include mechanisms to reduce the risk of either overbuilding the system and ending up with stranded assets or underbuilding the system and facing reliability challenges.

While many of these tariffs embed similar types of provisions, such as the size of contracted load and minimum ratepayer protections, stakeholders currently lack a set of consistent design principles to either measure tariffs against or better assess whether something is missing from a tariff. To that end, RMI and Advanced Energy United (United) have worked with input from utilities, consumer advocates, large-load customers, nonprofits, regulators, and other stakeholders to develop a set of common tariff design principles for large-load customers.

These design principles are intended for a broad audience: they can be used by utilities and stakeholders when developing a large-load tariff; by regulators and consumer advocates when analyzing a filed tariff; and by other stakeholders and parties to evaluate the contents of a tariff. The principles can also aid in the development of a stand-alone tariff that applies to a defined rate class for large-load customers, in the creation of a default rate for large-load customers by a utility commission, or as part of a rate case or broader resource procurement and evaluation strategy.

The goal of the tariff design principles is to bring consistency to tariff design and development, supporting the application of best practices across jurisdictions. With consistency in tariff design, we hope this will ultimately decrease the administrative burden on regulators, utilities, consumer advocates, large-load customers, and other stakeholders who are having similar types of conversations in multiple markets.

The tariff design principles are designed as a one-page checklist. They are neither exhaustive nor intended to replace the jurisdiction-by-jurisdiction analysis and discussion that is currently occurring across the country. Rather, they are one resource in your toolkit, recognizing that the complexity of the issue does not mean the application of these principles will be the same for everyone. The best design for a large-load tariff will balance these principles with the states’ policy priorities and existing utility system.