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As distributed energy resources (“DER”) are becoming increasingly common, the debate on how customers with such systems should be compensated is intensifying in many states. The National Association of Regulatory Utility Commissioners (NARUC) is creating a Distributed Energy Resources Compensation Manual to assist states with these policy decisions. We recently submitted comments to NARUC’s Staff Subcommittee on Rate Design regarding the most economically desirable approach to use for DER compensation. As DER start playing a crucial role in grid modernization as well as clean energy policies, it is important to establish a socially desirable framework that can be used consistently in different states and in discussions of different distributed energy resources, not just distributed solar generation. Further, as resource choices that can balance demand and supply increase, and utility-scale renewables become more common, a consistent formulation that could provide a true value comparison among different alternatives is needed.