Application of energy efficiency indicators in electric power distribution tariff-setting

Abstract

To increase the energy efficiency of the Russian economics it is necessary to incentivize the reduction of consumption of energy resources by different organizations including Distribution Network Operators. The existing system of regulation of electricity distribution tariffs in the Russian Federation contains incentives for Distribution Network Operators to reduce only their electricity losses. The paper develops a method of calculating energy efficiency indicators for Distribution Network Operators and an approach to accounting these indicators in electric power distribution tariffs in case of setting tariffs using benchmarks or using the method of long-term indexation of the total required revenue. The advantage of the method suggested in the article compared to energy efficiency incentives used in different European countries and the US consists in the fact that it does not complicate tariff-setting procedures and does not require significant investments, increasing transaction costs or extensive amendments to existing legislation.