Today’s electricity rates often are legacy designs that do not reflect the dynamics of an evolving power grid or align with current policy objectives. Four steps will assist utilities, regulators, and industry stakeholders in modernizing outdated electricity rate designs. 1. Understand the context for rate design change: The power system is changing at a pace that the industry has not experienced for decades. It is essential to understand the implications of these changes so rates can evolve to remain consistent with changes to the underlying cost profile, customer preferences, and power system requirements. 2. Establish ratemaking objectives: Rates can do more than recover utility costs. They can be a tool for promoting desired outcomes such as improved energy affordability, flexible and efficient electricity consumption, or promoting technology adoption. First, these objectives must be clearly defined and prioritized. 3. Account for tradeoffs when designing new rates: Rate design is the art of balancing tradeoffs. It is essential to understand these tradeoffs when designing new rates, particularly if the rates are being used as a tool for accomplishing policy objectives that extend beyond the basic goal of cost reflectivity. 4. Transition to the new rates with a plan: The move to well-designed rates requires a transition plan. This will ensure that rate design changes do not happen in isolation and are consistent with a long-term, holistic vision. The report, published as an interactive web tool for which the content can be separately downloaded as a standalone document, is intended to allow state energy regulators, utility rates staff, and other industry stakeholders with an interest in rate design to selectively “drill down” on content that is relevant to their interests and situation.

Electricity demand from large load customers such as data centers is projected to grow significantly in the near term. While data centers play an important role in advancing technology innovation and economic growth in the United States, data center energy needs present challenges and opportunities for electricity supply and infrastructure. This technical brief serves as a foundation for the discussion of issues and sharing of perspectives among utilities, regulators, large load customers, and other stakeholders. As utilities and regulators explore rate structures to address growing data center electricity demand, several issues have emerged: -Fair allocation of electricity system costs to large-load customers without unfair shifting of costs to other customers -Appropriate mitigation of the financial risks associated with stranded assets from underutilized utility system investments -Mitigation of operational and resource adequacy risks if electricity demand exceeds supply -Appropriate risk-sharing in commercializing newer electricity technologies such as advanced geothermal, small modular reactors, and long duration energy storage -Accommodating the diverse needs of large-load customers, such as having the option to match electricity consumption with output from carbon-free resources or using onsite generation to provide system capacity The technical brief also identifies key design elements that aim to address these issues and uses leading examples from pending and approved rate structures, agreements, and special contracts to ground the elements in practice.