# Optimal Retail Tariff Design with Prosumers: Pursuing Equity at the Expenses of Economic Efficiencies?

arXiv: https://arxiv.org/abs/2209.14505 · HTML: https://mlsanity.com/paper/2209.14505/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 29 Sep 2022.

## Built on by (most cited first, 1 of 1)

- [Peer-to-Peer Energy Trading of Solar and Energy Storage: A Networked Multiagent Reinforcement Learning Approach](https://mlsanity.com/paper/2401.13947/) (2024)

## Abstract (arXiv)

Distributed renewable resources owned by prosumers can be an effective way of fortifying grid resilience and enhancing sustainability. However, prosumers serve their own interests and their objectives are unlikely to align with that of society. This paper develops a bilevel model to study the optimal design of retail electricity tariffs considering the balance between economic efficiency and energy equity. The retail tariff entails a fixed charge and a volumetric charge tied to electricity usage to recover utilities' fixed costs. We analyze solution properties of the bilevel problem and prove an optimal rate design, which is to use fixed charges to recover fixed costs and to balance energy equity among different income groups. This suggests that programs similar to CARE (California Alternative Rate of Energy), which offer lower retail rates to low-income households, are unlikely to be efficient, even if they are politically appealing.