The bill alignment test: Identifying trade-offs with residential rate design options

The proliferation of smart meter data allows the application of new analytic methods to inform regulatory deliberations. The bill alignment test (BAT) method, which compares the costs allocated to each residential customer with their electric bill, is introduced to help regulators consider how a proposed rate design balances various regulatory criteria. The BAT requires an explicit statement of preferences by policymakers or stakeholders and choices about allocating residual costs unassociated with customer-level causality. The BAT is applied to more than 35,000 smart-meter customer load profiles to assess the trade-offs associated with proposed rate designs. This example demonstrates the impact of residual cost allocation preferences and tariff design choices on proposed tariff evaluation. •Smart meter data enables new analytic methods to inform regulatory deliberations.•The bill alignment test evaluates how rate proposals balance regulatory criteria.•The method compares allocated costs to residential customer bills.•Case study uses method on 35,000 smart meter residential customer load profiles.•Demonstrates significance of residual allocation method choices.