Florida Municipal Electric Association (FMEA) recently published this article by our rates manager, Jillian Jurczyk, in its 2024 winter edition of RELAY Magazine.
Abstract
Many utilities’ costs and rates are misaligned. The limitation of early metering technology originally led utilities to clump all residential ratepayers into one group with a single rate structure (i.e. fixed customer charge and variable energy rate). Today’s technological advancements in metering now provide a better understanding of how residents use electricity. Residential usage patterns are not as homogeneous as the utility industry leaders once believed.
Factors like a utility’s peak time, generation resources available and market prices can greatly affect the cost of a kWh at any given time, which means energy costs vary at different times of the day. Because utilities do not typically account for these factors, they are potentially undercharging customers who use energy during high-cost periods and overcharging customers who use energy during low-cost periods. This imbalance doesn’t necessarily equalize over time.
To solve for these misaligned rates and residential usage variability, Jillian suggests combining a monthly customer charge, a time-based energy rate, and a distribution demand charge. To learn about these solutions and how they work, check out the article at the button below:
