We examine the role that maximum demand charges (MDCs) can play in avoiding the death spiral that some utilities may otherwise face as the distributed generation (DG) of electricity proliferates. We find that MDCs generally secure gains for consumers that do not undertake DG, and often secure...

The cost of supplying electricity can vary substantially from day to day and even from hour to hour. This is the case because generating units with relatively high operating costs often must be called upon to produce electricity during times of peak demand. In contrast to the ever-changing cost...