How utilities can leverage advanced rate structures and load control programs to manage emerging technology adoption, reduce system costs, and support decarbonization goals.
Electric utilities face a transformative moment. As technologies historically powered by fossil fuels — vehicles, space heating, water heating — shift to electricity, utilities must manage dramatic changes in when and how customers use power. Left unmanaged, this emerging load could drive massive infrastructure costs.
EV adoption is accelerating. Without managed charging, most EVs charge during evening peak hours when drivers return home — coinciding with and amplifying system peaks.
CCHPs replace fossil fuel heating with electric. They increase winter peaks — especially during the coldest hours when the system is already stressed and efficiency drops.
Heat pump water heaters with storage tanks represent a flexible, shiftable load. Their consumption can be timed to off-peak hours without impacting customer comfort.
Customer-sited solar reduces daytime retail sales while battery storage can shift load and generation. Both reshape the load curve and alter cost recovery dynamics.
The Core Problem: These emerging technologies are inherently flexible — they can be shifted in time. But if adoption is left "unmanaged," loads will concentrate during peak hours, driving up capacity costs for generation, transmission, and distribution. Modeling shows unmanaged electrification could increase capacity-related costs by up to 80% over 20 years.
Illustrative total system load (MWh) under two scenarios
Utilities have two complementary approaches to manage evolving load shapes: indirect control through innovative rate design (price signals), and direct load control where the utility or a third party manages devices on the customer's behalf.
Time-differentiated pricing signals that incentivize customers to shift consumption from peak to off-peak periods.
✓ Customer chooses when to respond
✓ Works through price incentives
✓ Scales across customer classes
✓ Examples: TOU, CPP, EV-only rates
The utility or a third party directly manages end-use devices to curtail or shift load during peak events.
✓ Utility controls timing & duration
✓ More predictable load reduction
✓ Customer receives incentives/credits
✓ Examples: EV charger control, CCHP cycling
Rates as a Resource: Rate design has traditionally been viewed as a cost accounting exercise. Innovative rate design flips this paradigm — rates become a strategic resource that actively manages load shapes, avoids costly infrastructure investments, and supports decarbonization objectives.
Not all emerging technologies are equally flexible. The more flexible the load, the better candidate for load control programs:
Beyond traditional flat rates, utilities have a growing toolkit of time-differentiated and device-specific rate structures. Each has distinct strengths, trade-offs, and implementation requirements.
Click each rate design to see how pricing varies across the day:
EV load is uniquely suited for innovative rate design because it is highly flexible and elastic to pricing — customers can easily shift when they charge with minimal inconvenience.
Rather than applying TOU to the entire household, an EV-only rate targets just the EV load via a separate meter or sub-meter. This maximizes response without disrupting other household consumption.
Research shows even modest on-peak to off-peak ratios (1.5:1 to 3:1) produce meaningful load shifting for EVs. Aggressive differentials (4x+) are unnecessary and may deter enrollment.
Increasing access to workplace charging shifts load to daytime hours when solar production is high. Modeling shows this can save an additional $50M per year in system costs by 2040.
On-peak periods should coincide with hours that drive the highest wholesale capacity, transmission, and distribution costs on the system.
The on-peak to off-peak price ratio must be large enough to change behavior. Research from RMI and NREL suggests a minimum 4:1 ratio for meaningful peak reduction (~10%), though EV-specific managed charging may respond to more modest differentials (2:1 to 3:1).
Off-peak rates should never fall below marginal costs plus fixed cost contributions. This ensures revenue adequacy and maintains equity in cost recovery.
Different TOU periods for different customer groups can prevent "snap-back" — where all curtailed load returns simultaneously and creates a new peak.
While rate design relies on customers responding to price signals, direct load control puts the utility in the driver's seat — directly managing devices to reduce peak demand. This approach is increasingly powerful as connected devices proliferate.
Utility-managed EV charging can shift substantial load off-peak. Customers receive preferred rates in exchange for allowing the utility to schedule charging during low-cost hours. The customer's vehicle is fully charged by morning.
Heat pumps can be cycled in groups — some units run while others pause — to reduce aggregate peak demand without significant comfort impact. Backup systems provide safety during extreme events.
Tanked heat pump water heaters are ideal for direct control — their thermal storage means consumption can be curtailed for hours without the customer noticing any change in hot water availability.
Behind-the-meter battery storage operates as both load and generation. Coordinated dispatch allows utilities to draw on distributed storage during peak events, deferring grid-scale investments.
The most effective strategy combines rate design with direct load control. Each tool has unique strengths:
The Snap-Back Effect: When a Direct Load Control event ends, curtailed load can all return at once — creating a new peak. Strategies to mitigate this include "feathering" the load back gradually (e.g., releasing only 50 MW per hour of a 200 MW curtailment) and staggering TOU periods across customer groups.
Quantitative modeling demonstrates that strategic deployment of load control programs can dramatically reduce the cost impacts of emerging technology adoption. The numbers make the case compelling for utilities, regulators, and customers alike. Read the full study →
$500M
Potential incremental capacity cost increase by 2040 from unmanaged emerging technology adoption — an 80% increase over baseline.
$150–$200M
Annual savings achievable by 2040 through strategic deployment of innovative rate design and direct load control programs.
~50%
Load control programs can cut the rate pressure from technology adoption roughly in half — from $0.19/kWh unmanaged to $0.13/kWh with rates by 2040.
Illustrative total capacity-sensitive costs ($000s) over the study horizon
Illustrative $/kWh for capacity-sensitive cost components
Infrastructure Note: The savings from Load Control Programs do not account for the upfront costs of metering, communications, billing systems, and data management infrastructure needed to support them. Utilities must weigh these investments against the projected long-term savings — but stakeholders indicate such costs are modest compared to the avoided capacity investments.
Implementation of innovative rates is a cumulative journey. Each step builds on the last, increasing the complexity and load management capability. Utilities can enter at different points depending on their current sophistication.
Embedded cost of service study → Fair & equitable rates as the foundation
Avoided cost analysis → TOU, CPP, dynamic rates with material differentials
Incremental cost by device → EV-only rates, flexible load pricing packages
Utility/3rd party partnerships → Subscription services, managed charging packages
Opt-out programs, shadow pricing, full market integration
The biggest barrier to innovative rates isn't technology — it's customer enrollment. These strategies help:
Default enrollment with the option to opt-out dramatically increases participation compared to voluntary opt-in programs. Where incentives are offered (EV chargers, heat pumps), participation in the Load Control Program should be a condition.
The moment a customer purchases an EV or heat pump is the ideal time to enroll them in a load control program. Partner with auto dealers, HVAC installers, and technology vendors to integrate enrollment into the purchase process.
Customers need a clear, simple value proposition — not complex tariff schedules. Marketing should focus on cost savings and environmental benefits. Utilities are trusted advisors and should position Load Control Programs as the smart choice.
State regulators can accelerate adoption by requiring evaluation of load control programs in integrated resource planning, supporting pilot programs, and enabling cost recovery for necessary infrastructure investments.
Innovative rate design isn't just about cost management — it's a key enabler of decarbonization, affordability, and new utility business models that serve customers better.
Projected annual CO₂ savings by sector (metric tonnes) from the Vermont Public Service Department study
Load control programs support electrification by keeping costs manageable. If emerging technology adoption causes rates to spike, it undermines the economic case for customers to switch from fossil fuels. Strategic rate design makes the clean energy transition affordable.
Early adopters of EVs and heat pumps tend to be higher-income. Without targeted rates, all customers bear the cost of grid upgrades driven by these new loads. Cost-causation-based rates and enrollment requirements ensure adopters participate in managing their impact.
As technology evolves, 3rd party service providers will offer load management as a service. Utilities should create open access frameworks that enable partnerships while maintaining system benefits. Subscription models and bundled services represent the next frontier.
Infrastructure investments for advanced metering, billing systems, and communications take years. Utilities should begin the process today — even with pilot programs — rather than waiting until load growth forces reactive, costly responses.
References: Vermont Department of Public Service — Advanced Rate Design Initiative Study (2020) • NewGen Strategies & Solutions LSAM™ Modeling • U.S. DOE Office of Energy Efficiency and Renewable Energy • Smart Electric Power Alliance (SEPA) EV Rate Research
NewGen pioneered the Advanced Rate Design framework and brings deep expertise in load shape modeling, innovative rate design, and implementation strategy for utilities navigating the energy transition.
We’ve implemented TOU, CPP, dynamic rates, and device-centric pricing for utilities across the country. That hands-on experience means we know what works in practice — not just in theory.
Our recommendations are built on rigorous methodology that holds up under scrutiny — whether in a city council chamber, before a public utility commission, or in front of a cooperative board. When your rates are challenged, our work speaks for itself.
Your billing data, financial records, and system metrics hold the answers — but only if you know how to read them. We help utilities unlock insights from their own data to build smarter rate structures and more accurate cost allocations.
Every state, every commission, every governing body has its own regulatory landscape. We understand the subtleties — the precedents, the expectations, the unwritten rules — and tailor our approach so your rate case fits your jurisdiction.
The utility landscape is changing fast — distributed energy, electrification, aging infrastructure, shifting demographics. We don’t just solve today’s rate case. We help you build a framework for the challenges ahead.
Great analysis means nothing if you can’t communicate it. We help you translate complex rate studies into clear narratives for every audience — staff, elected officials, regulators, and the customers who pay the bills.
Ready to start the conversation?
Connect With NewGen →