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 September 29, 2026

Evidence through 2020-11 · 0 sources have no source-event date

Content modified 2026-09-29

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.

Review confirmed · Review due October 29, 2026

The previous review deadline was September 19, 2026. The missed interval remains unverified; the current review does not establish historical coverage.

The cited evidence supports this statement within the source’s stated scope. Its jurisdiction and source-event date limit its applicability to a particular project.

Applicable jurisdiction: US; methods and rates vary

Definition claim verification: Verified September 29, 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 guidebook distinguishes avoided energy-generation costs, avoided generation-capacity investment, and avoided transmission and distribution losses as separate utility value streams in an analysis of distributed solar.

Review confirmed · Review due October 29, 2026

The previous review deadline was September 19, 2026. The missed interval remains unverified; the current review does not establish historical coverage.

The cited evidence supports this statement within the source’s stated scope. Its jurisdiction and source-event date limit its applicability to a particular project.

Applicable jurisdiction: US; methods and rates vary

Decision-context claim verification: Verified September 29, 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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