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The current power rates signal

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...

  • Member since 2003
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  • Aug 10, 2021
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The current power rates signal

In round numbers:

* The average residential rate in the USA is USD 13 cts/kWh 
* The investment required (generation + transmission + distribution) to meet 1 kW of demand is USD 3 000.
* The amortization of this investment is approx. USD 33/month
* The monthly energy consumption per kW of demand is USD 33/month/USD 0,13/kWh or approx 250 kWh

But that's where the "load factor" comes in. A typical home has a load factor of 33%. In other words, it demands 3 kW from the local utility to consume an average of 1 kW throughout the month.

In other words:

* The amortization of the investment should be USD 100/month
* Referred to the consumption of 250 kWh, it is equivalent to USD 0,4/kWh
* So an average home should pay way more given this reality
* The rate should be in USD/kW of registered demand
* The consumer would pay the rate x registered demand on a monthly basis
And this model would have the great advantage of encouraging the customers to make their consumption more uniform throughout the day. And each customer would pay according to its demand as opposed to the current average system, A relevant example:

* Replacing instant electric heaters with tank heaters
* Tank heaters programmed to be on at low consumption times

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Rafael Herzberg's picture
Thank Rafael for the Post!
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