
Utility Management Group
Senior decision-makers come together to connect around strategies and business trends affecting utilities.
Post
Proposed evolution of the power rate structure
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!
Discussions
No discussions yet. Start a discussion below.
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.
Sign in to Participate