Calculating efficient Distribution Use of System (DUoS) charges for Ireland: Indicative tariffs for residential, commercial and industrial consumers

This paper considers the design of efficient Distribution Use of System (DUoS) tariffs for the Irish electricity distribution network. We calculate indicative cost-reflective ‘Coasian’ tariff for residential, commercial and industrial consumers. Under a cost-reflective ‘Coasian’ structure, non load-related costs are recovered by the fixed (‘standing’) charge, whilst load-related costs are recovered by either an energy or capacity-related charge. There is a plausible argument in favour of both energy or capacity-related charges to recover load-varying costs. A capacity-related charge is our preferred specification. Distribution network costs are driven primarily by non load-varying components. This motivates a switch in tariff structure from a predominance for energy-related charges towards a structure with a predominance for fixed or capacity-related charges. We consider nameplate capacity charges. Further Further work should consider a more precise specification of capacity charges, possibly incorporating time-of-use consumption data, such that capacity charges can be directly linked with each user’s impact on the capacity requirement in the system.