Utility Rate Structures & Tariffs Flashcards
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Read the first 7 Utility Rate Structures & Tariffs flashcards as text
A commercial customer is billed under a ratchet clause that charges 85% of the peak demand recorded in the last 12 months. Last year's peak was 500 kW but this month's actual demand is 300 kW. What is the billable demand?
Answer: 425 kW
The ratchet applies 85% of the 12-month peak (0.85 × 500 kW = 425 kW), which exceeds actual demand of 300 kW, so 425 kW is billed.
Which rate design mechanism is specifically intended to decouple utility revenue from the volume of electricity sold?
Answer: Revenue decoupling adjustments
Revenue decoupling adjustments separate utility revenue recovery from sales volume, removing the disincentive for utilities to promote energy efficiency.
A manufacturing plant operates on an interruptible service tariff. The utility issues a curtailment notice. Which consequence is most likely if the plant fails to curtail?
Answer: Penalty charges or loss of interruptible rate discount
Interruptible tariffs offer lower rates in exchange for agreeing to curtail; non-compliance typically triggers contractual penalty charges or forfeiture of the rate discount.
What is the primary purpose of a fuel adjustment clause (FAC) or energy cost adjustment in utility tariffs?
Answer: To pass through changes in fuel and purchased power costs to customers between rate cases
A FAC allows utilities to automatically adjust bills for fluctuations in fuel and purchased energy costs without filing a full rate case.
Under a real-time pricing (RTP) tariff, what information must a customer monitor to optimize their energy costs?
Answer: Hourly or sub-hourly wholesale electricity prices
RTP tariffs price electricity at or near wholesale market prices that change hourly or more frequently, requiring customers to track these signals to shift or curtail load.
Which of the following best describes a standby or backup service tariff?
Answer: A rate for customers generating their own power who need utility supply when their generator is unavailable
Standby tariffs cover utility power provided to self-generating customers during scheduled maintenance or unplanned outages of their on-site generation.
A utility's tariff includes a minimum monthly bill calculated as the greater of the energy charge or $8.00 per kW of connected load. What is this provision designed to recover?
Answer: Fixed infrastructure and capacity costs regardless of usage
Minimum bill provisions ensure recovery of fixed infrastructure costs even when a customer uses very little energy in a billing period.