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Proposed evolution of the power rate structure

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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  • Oct 26, 2020
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Proposed evolution of the power rate structure 

If you contract NETFLIX, a mobile phone plan, a car subscription - it is about a fixed monthly fee for each. It doesn't matter if you watch 50 films or none, talk all day on your cell phone or practically don't use it, drivel 1 thousand miles a month or stay quarantined at home. 

The reason is simple. The fixed charge reflects the biggest cost involved: the amortization of the invested capital...that is fixed per month.

With electric power, I suggest, the same approach. The monthly charge to be predominantly fixed, depending on the capacity demanded by the customer. Reason: the electricity sector is essentially capital-intensive.

An example.

Suppose a house has 3 instantaneous electric showers of 5 kW each and another that has a central heater of accumulation of 3 kW, to meet the same demand of baths. The two houses have the same monthly consumption of 500 kWh.

One house has a demand from the public grid of 15 kW (the three showers operating simultaneously) and another of 3 kW. The difference in investments required to serve the two houses is 5:1. But the current system does not identify this reality because it bills the same 500 kWh for both houses.

If you want to know more about this concept and how it can be applied, get in touch!

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Thank Rafael for the Post!
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