Utility energy rates are not generally a topic that stimulates much discussion, but times have changed and electric rate design is now all over the news. With load growth slowing, energy efficiency expanding and distributed resources like solar growing in popularity, utilities are looking for revenue mechanisms that are not tied solely to the volume of energy used by residential customers. One design popping up in pilots and deployments is demand-based rates. These rates, long standard for Commercial and Industrial customers, add a component to the bill based on the maximum amount of energy used over a short period of time (15-minutes to 1 hour). This peak usage rate, called demand, adds a charge to the bill that is independent of the total energy used for the month. The demand charge would generate revenue from a solar customer, for example, who uses less energy in total but still relies on the utility grid part of the time.
I wrote a white paper that explains demand charges, looks at implementations from Georgia Power and Cobb EMC and discusses how demand response and customer engagement may help customers save money with these rates.
to download the paper and please share your feedback in the comments section.