Defined term

Avoided-cost rate

An avoided-cost rate is a value based on costs a utility or system avoids because a specified increment of electricity or service is supplied by another resource.

Also known as utility avoided-cost rate

grid · Concept code GS-CONCEPT-065 · Last verified August 20, 2026

Evidence through 2021-02-01 · 0 sources have no source-event date

Content modified 2026-08-20

Definition and boundaries

Definition

An avoided-cost rate is a value based on costs a utility or system avoids because a specified increment of electricity or service is supplied by another resource.

Applicable jurisdiction: US; methods and rates vary

Definition claim verification: Verified August 20, 2026

In plain language

For Avoided-cost rate, the controlling utility tariff, interconnection document, meter arrangement, and jurisdiction matter more than a generic national description.

What it is not

It is not automatically the household retail rate, wholesale spot price, or one national value.

Decision context

Why it matters

The legal authority, resource, time, location, method, forecast, losses, capacity treatment, environmental values, and update schedule determine the applicable rate.

Applicable jurisdiction: US; methods and rates vary

Decision-context claim verification: Verified August 20, 2026

Information boundary

This page provides general educational context, not a site design, production guarantee, utility determination, contract interpretation, legal opinion, tax conclusion, or individualized financial advice. Verify property, equipment, utility, jurisdiction, program, and agreement details before acting.

Selector-derived public graph

Primary topic: Finance

Broader topic

Electricity pricingPublished conceptAvoided-cost rate is a more specific concept under Electricity pricing

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