TransActions – November/December 2015
The Next Evolution of Residential Rates
Traditionally, residential rate design has done an imperfect job of recovering fixed costs appropriately. For decades, the standard residential rate has consisted of a customer charge and a consumption-based charge. The customer charge is a fixed amount billed each month regardless of energy consumption. There are, of course, many different forms this basic model can take, but the key fact is many fixed costs1 are recovered through the variable rate component (e.g. the energy charge). There were several reasons this was (or, more likely still is) the case, including lack of affordable interval metering technology.