Development options for distribution tariff structures in Finland

Abstract

In this paper, we study the development options of tariff structures in electricity distribution in Finland. We compare the impacts of three different tariffs from the viewpoints of customers, distribution system operator (DSO), electricity supplier, and society. Analyzed tariffs are (1) energy oriented tariff, which is currently in use, (2) power limit tariff, and (3) power tariff. Based on the analyses, it seems that it is justified to include power based price component in distribution tariff. Generally, the impacts of both analyzed power based tariffs are quite similar. However, it seems that power tariff is a bit stronger candidate. Nevertheless, it should be noted that the benefits of the power-oriented pricing, illustrated in the paper, could be achieved only by well-designed tariff system. Although analyses are based on Finnish case, most of the results are generalizable to other countries also.