Transition to peak-load-based tariffs can be disruptive for different groups of consumers

New network tariffs designed to recover grid operating costs can introduce up to a 500% increase in charges for some households. A transition from volumetric to peak-load-based tariffs will require targeted policy measures such as clear price signals, information about household electricity consumption and temporary compensation or mitigation mechanisms.

Messages for policy

• New tariffs designed to support continued network charges in the face of increased electricity self-consumption should include cost transparency and set the right consumer incentives.

• The low predictability of tariffs based on peak charges and their potentially high financial impact may result in an increased number of consumer complaints. Procedures will need to be introduced to handle this.

• Impact of alternative tariffs on household budgets is largely dependent on the household’s economic status. Mitigation mechanisms to deal with hardship cases, at least during the transition phase, are required.

• Tariffs that combine measured peak demand and volumetric components can help manage increased self-consumption and rebalance the distribution of network costs across customers irrespective of their socioeconomic status.