Distribution charges for consumers and microgeneration considering load elasticity sensitivity

This paper presents an approach for calculating a tariff for electrical energy distribution systems. The methodology is similar to the standard tariff-calculation method used in Brazil. The approach combines the concepts of time-of-use tariffs and Ramsey prices. The process, initially designed for energy consumers, can be used to establish tariffs for micro-generation units. The resulting regulated distribution tariffs, for both consumer and generation units, has an hourly signal associated with long-run marginal costs. Moreover, while minimizing any loss of social benefits, the tariffs comply with the revenue reconciliation constraint. The proposed approach is applied to a real Brazilian distribution system and compared to the current procedure used by the Brazilian Electricity Regulatory Agency. ► A new approach to determine the tariffs in the electrical distribution system is proposed. ► Ramsey prices are used both to maximize the social welfare, and to obtain the economic signal. ► It is developed a model able to consider the dynamic behavior of load, given price changes. ► The new tariff tends to optimize the load of the system.