CEA Utility Rate Structures & Tariffs 5

Question 1

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?

Accepted Answer

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

Answer

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.

Question 2

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

Accepted Answer

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

Answer

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.

Question 3

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?

Accepted Answer

Non-coincident peak demand charge

Answer

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.

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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.

(CEA) Certified Energy Analyst Practice Test

(CEA) Certified Energy Analyst Practice Test

CEA Utility Rate Structures & Tariffs 5