Does the opt-in tariff generate benefits that flow to all ratepayers?
Yes, there are cross-subsidies from customers in the opt-in tariff program to non-participants. Two categories of benefits include avoided demand costs and deferred capital requirements.
- Utility systems with weather-driven peak demand can reduce peak demand by investing in energy efficiency upgrades to weather-driven loads as part of their investments in whole building energy upgrades.
- Utility systems with distribution circuits or substations that are reaching load capacity can defer investment in expansion with deliberate focus on energy efficiency upgrades in areas served by those assets.
Non-participants pay only what is warranted for the benefits of the PAYS program, and PAYS does not produce “free riders” because customers pay for 100% of their cost for the most cost effective upgrades.