We examine the role that maximum demand charges (MDCs) can play in avoiding the death spiral that some utilities may otherwise face as the distributed generation (DG) of electricity proliferates. We find that MDCs generally secure gains for consumers that do not undertake DG, and often secure...

We analyze the regulatory procurement of electricity infrastructure that can take the form of either a traditional core investment or non-traditional distributed energy resources (DERs). We identify conditions under which a regulated utility will engage in self-sabotage (i.e., intentionally...

The cost of supplying electricity can vary substantially from day to day and even from hour to hour. This is the case because generating units with relatively high operating costs often must be called upon to produce electricity during times of peak demand. In contrast to the ever-changing cost...

Electricity customers who install solar panels often are paid the prevailing retail price for the electricity they generate. We show that this rate of compensation typically is not optimal. A payment for distributed generation (w) that is below the retail price of electricity (r) often will...

We consider the optimal design of simple cost-sharing policies to motivate electricity distribution utilities to manage the costs of distributed energy resource (DER) projects. The optimal share of realized cost savings (s) that is awarded to the utility takes a particularly simple form in...

We analyze the optimal design of policies to motivate electricity distribution companies to adopt efficient distributed energy resources (DER) and manage associated project costs. The optimal policy often entails a bias against new DER projects and implements considerable cost sharing when DER...

This document is a Technical Appendix containing supplemental proofs that appear in Brown, D. and D. Sappington, "Employing Gain-Sharing Regulation to Promote Forward Contracting in the Electricity Sector," Journal of Regulatory Economics, 2023