In partnership with PLMA, this group is for practitioners from energy utilities, solution providers, and trade allies to share load management expertise and explore innovative approaches to program delivery, pricing constructs, and technology adoption.


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
  • 2,219 items added with 1,294,645 views
  • Aug 10, 2021

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


No discussions yet. Start a discussion below.

Rafael Herzberg's picture
Thank Rafael for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »