3.10 Tariff and Market Issues

3.10.8 Market Fairness Issues

DER systems owned by some customers may result in unfair financial impacts on other customers. While most customers with DER systems generate some or all of their electricity for their own use, thus displacing some utility generation, those same customers usually remain connected to the local distribution system.  They use the electric grid to purchase supplemental power from their local utility and to sell power to their utility when their systems generate a surplus. On the surface, this may seem fair, but in reality as their revenues from these DER-owners decrease, utilities will not able to recoup all of their on-going maintenance and expansion costs. Therefore, if no overall rate adjustments are made, they will be forced to increase rates for customers without DER systems.

Not only electrical rates may be impacted. Services to non-DER customers may also be affected by the implementation of DER systems since operational issues can arise when DER systems are added to the distribution grid.  For example, since many DER systems only generate intermittently, this fluctuating power can cause power quality issues for other customers.  As another example, DER systems may change voltage levels on a feeder, thus possibly causing voltage problems for other customers.   In addition, some customers may be able to participate in demand-response programs whose total generation and loads are managed predominantly to lower energy costs for the participants.  This “generation-load management” may affect the capacity of the local distribution circuit to provide services to other customers who are not able to participate in such programs.  Again, these impacts should be factored into compensation for DER services.