Large load tariffs have a problem. Clean transition tariffs are the solution.

AI generated summary

The increasing demand for large load requests has posed significant challenges for utilities, particularly in balancing the need for infrastructure investment with the goals of clean energy. Utilities have introduced two types of tariffs: large load tariffs, which aim to protect shareholders and other customers from costs associated with infrastructure, and clean transition tariffs, which allow large load customers to engage directly with renewable energy developers. However, an analysis of existing large load tariffs reveals that they often fall short in protecting both shareholders and customers, primarily due to short contract terms and inadequate revenue generation for new generation assets.

To address these shortcomings, utilities could consider prioritizing solar and storage projects, negotiating stricter electricity supply agreements, or allowing large load customers to share capacity risks. However, these measures may still leave significant stranded asset risks unaddressed. The article advocates for clean transition tariffs as a viable solution, suggesting that they can facilitate access to renewable energy while also redistributing risk away from utilities. This approach could enable third-party independent power producers to take on the long-term contract risks associated with new generation assets, ultimately benefiting both utilities and large load customers.