CEA Utility Rate Structures & Tariffs 3

Question 1

A hospital's power factor is measured at 0.78 lagging. Its tariff imposes a power factor penalty below 0.90. Which action would most directly eliminate this penalty?

Accepted Answer

Adding capacitor banks to supply reactive power locally

Answer

Capacitor banks supply reactive (VAR) power locally, raising the power factor toward unity and eliminating the lagging power factor penalty.

Question 2

Under a net metering tariff, what happens when a customer's renewable generation exceeds their consumption during a billing period?

Accepted Answer

The meter runs backward and excess kWh credits are applied to future bills or compensated at a defined rate

Answer

Net metering credits excess generation against future consumption or compensates it at a specified rate, though the exact compensation varies by state and utility policy.

Question 3

What distinguishes a coincident peak demand charge from a non-coincident peak demand charge?

Accepted Answer

Coincident peak is based on the customer's demand at the time of the utility's system peak; non-coincident is based on the customer's own monthly peak

Answer

Coincident peak demand reflects the customer's load at the moment the entire utility system peaks, directly tying cost to grid stress; non-coincident measures the customer's own highest demand regardless of when it occurs.

Question 4

A large industrial customer is offered a special contract rate below the published tariff. Under which regulatory condition is this typically permissible?

Accepted Answer

When the contract rate still covers the utility's incremental cost of service and is approved by the regulator

Answer

Special contracts are permissible when rates cover incremental costs, avoiding cross-subsidization of other customers, and are approved by the relevant regulatory authority.

Question 5

In a declining block rate structure, a large industrial customer consuming 5,000,000 kWh/month will pay a lower average rate than a small commercial customer consuming 10,000 kWh/month. What is the traditional justification for this design?

Accepted Answer

Larger loads spread fixed utility costs over more kWh, reducing per-unit costs

Answer

Declining block rates reflect that fixed costs per kWh diminish as consumption rises, so very large customers are served at a lower marginal cost.

(CEA) Certified Energy Analyst Practice Test

(CEA) Certified Energy Analyst Practice Test

CEA Utility Rate Structures & Tariffs 3