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Electric power: why do tariffs need to change?

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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  • Sep 14, 2020
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Electric power: why do tariffs need to change?

The answer is simple! The investments related to the supply of electricity are primarily due to the capacity, in kW, made available to the market.

In the same token, the monthly amortization of investments is a function of this capacity. And NOT of the consumed energy.

Thus, it is easy to imagine that the collection of customers, whether regulated or deregulated, should be a function of this monthly amortization.

My proposal is to install "smart meters" on each client and record two parameters: peak and off-peak demand. And the monthly charge would be a function of these two parameters.

Customers wishing to reach and maintain lower power bills, would prefer their consumption - as much as possible - (1) during off-peak hours, (2) scheduling the loads to operate in a dispersed manner (and not simultaneously), (3) doing arbitrage costs with other energy sources.

The natural result would be a reduction in the grid's required capacity, which would greatly benefit the whole power chain value.

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