The electricity sector is undergoing massive changes, due to the liberalization process and the changesoccurred in the regulatory regimes in many countries. In particular, the distribution sector is facing thechallenges related to the integration of an increasing amount of distributed generation (DG) in thedistribution grids, which is likely to affect the planning and operation of the grids themselves and,consequently, to cause additional costs and benefits for the different network users.This paper investigates the broad range of issues arising within the rate design process due to DGintegration, especially in terms of cost allocation and connected risk of cross subsidization of somecustomer categories by other ones.The simulations indicate, on one hand, that, when net metering is adopted and volumetric tariffsutilized, cross subsidization of customers with self generation by the customers without it is likely toarise; on the other hand, separate volumetric tariffs to be applied to producers and consumers areproposed, in order for the network costs to be allocated on a cost-causality basis and, in this way,neutralize such risk for cross subsidization.
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