Utility Rate Structures & Tariffs Flashcards

Under a seasonal time-of-use (TOU) rate, a food processing plant plans a major equipment test run. From a tariff management perspective, what is the most cost-effective timing?

Answer: Winter off-peak weekend nights when both energy and demand rates are lowest

Running equipment during winter off-peak weekend nights minimizes both the energy charge (lowest TOU tier) and avoids setting a high peak demand during the costliest billing window.

What is the primary risk that utilities cite when opposing full retail-rate net metering for rooftop solar customers?

Answer: Non-solar customers cross-subsidize solar customers who still use the grid but don't pay their full share of fixed costs

Utilities argue that solar customers who offset kWh but still rely on the grid at night shift fixed cost recovery to non-solar customers who pay full volumetric rates.

A CEA is evaluating a customer's bill under a three-part tariff: fixed customer charge, non-coincident peak demand charge, and volumetric energy charge. Which component would battery energy storage (BESS) most directly reduce?

Answer: Non-coincident peak demand charge

BESS is charged during off-peak periods and discharged during peak intervals to shave the customer's measured 15-minute peak demand, directly reducing the demand charge.

What is a 'demand response' (DR) rider or tariff, and what does a customer receive for participating?

Answer: A bill credit or rate reduction in exchange for agreeing to reduce load when the utility calls a DR event

Demand response programs pay customers (via bill credits, rate discounts, or direct payments) to reduce load during grid stress events, providing the utility with a dispatchable demand reduction resource.

In utility rate design, what does 'rate base' refer to, and why is it relevant to tariff levels?

Answer: The value of utility assets on which regulators allow the utility to earn a regulated return, which drives revenue requirement and tariff levels

Rate base represents the net investment in utility assets; multiplying it by the allowed rate of return is a key component of the utility's revenue requirement, which tariffs must recover.

A utility offers a 'time-varying transmission' charge that is highest during the five coincident peak hours of the year. What is the most effective strategy for a large C&I customer to minimize this charge?

Answer: Accurately predict and curtail load during those specific five peak hours each year

Transmission coincident peak charges are incurred only during the handful of system peak hours; customers who successfully curtail during those hours can dramatically reduce their transmission cost allocation.

A utility's tariff book includes Schedule GS-TOU (General Service Time-of-Use) and Schedule GS (General Service flat rate). A customer's facility operates 24/7 with very flat load. Which schedule is likely more cost-effective and why?

Answer: GS-TOU, because 24/7 operations earn an off-peak credit on all nighttime consumption

A 24/7 flat load means substantial consumption during cheaper off-peak and overnight TOU hours; the customer benefits from lower off-peak rates while also consuming during on-peak hours at a higher rate, but the net effect often favors TOU when off-peak consumption dominates.