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The Evolution in U.S. Electric Utility Rate Design

The Evolution in U.S. Electric Utility Rate Design the last decade a remarkable evolution in electric utility rate design has occurred in the United States. Some electric utility customers have noticed only the dramatic increases in their total monthly electric bills. However, more and more customers are becoming knowledgable about the nature of their rate structures, the rate options available to them and strategies for managing their electricity use to take advantage of new rate designs. One example of the evolution in electric rate design is the phasing out of declining block rates under which successive blocks of energy are charged at lower costs per kilowatt-hour (kWh) and successive blocks of peak demand are billed at lower charges per kilowatt (kW). Rates differentiated by season and time of day are becoming quite common, especially for large customers. Rates based on marginal costs (the cost of an additional unit of service) rather than on the average of costs incurred in the past (averaged embedded costs) are also part ofthe evolutionary process. In addition, there are numerous concepts-such as lifeline rates, interruptible rates, cogenera­ tion rates, and hook-up charges for new customers-that are undergoing scrutiny and development. This article reviews the factors stimulating this evolution, and reports on http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Annual Review of Environment and Resources Annual Reviews

The Evolution in U.S. Electric Utility Rate Design

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Publisher
Annual Reviews
Copyright
Copyright 1983 Annual Reviews. All rights reserved
Subject
Review Articles
ISSN
1543-5938
DOI
10.1146/annurev.eg.08.110183.000401
Publisher site
See Article on Publisher Site

Abstract

the last decade a remarkable evolution in electric utility rate design has occurred in the United States. Some electric utility customers have noticed only the dramatic increases in their total monthly electric bills. However, more and more customers are becoming knowledgable about the nature of their rate structures, the rate options available to them and strategies for managing their electricity use to take advantage of new rate designs. One example of the evolution in electric rate design is the phasing out of declining block rates under which successive blocks of energy are charged at lower costs per kilowatt-hour (kWh) and successive blocks of peak demand are billed at lower charges per kilowatt (kW). Rates differentiated by season and time of day are becoming quite common, especially for large customers. Rates based on marginal costs (the cost of an additional unit of service) rather than on the average of costs incurred in the past (averaged embedded costs) are also part ofthe evolutionary process. In addition, there are numerous concepts-such as lifeline rates, interruptible rates, cogenera­ tion rates, and hook-up charges for new customers-that are undergoing scrutiny and development. This article reviews the factors stimulating this evolution, and reports on

Journal

Annual Review of Environment and Resources – Annual Reviews

Published: Nov 1, 1983

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