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Cost-adherent tariffs - what would they look like?

image credit: Rafael Herzberg
Rafael Herzberg's picture
Consultant energy affairs, Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Aug 11, 2021
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Cost-adherent tariffs - what would they look like?

Engineering teaches that sizing power generation, transmission and distribution, circuits that supply homes, commerce, industrial and institutions depend on the maximum power demanded.

The economy shows that in order to have a financial return, the amortization of investments must be charged according to the interest rate, the project's useful life and the risks involved.

I mean, it's a fixed monthly cost.

But, the power bill is predominantly variable, with kWh consumption. Then there is a mismatch. The solution is to "rate" costs among everyone. And then a distortion arises. Those who are efficient pay for the inefficient.

A residence that has central heating and has a much lower maximum demand than one that has instant heating will pay the same bill if they have the same kWh energy consumption. But they require investments and, consequently, well-differentiated associated costs to meet them.

Fair rates need to reflect what happens. It is an opportunity to encourage the efficient use of energy, reducing costs and emissions.

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