About Tariffs

Electricity tariffs are the contract between a utility and its customers.  In the past selecting your electricity tariff was like choosing the color of your Model T, there was no choice.  That’s changing as Utility Commissions push the utilities to provide consumers with choices.  In deregulated markets, non-utility electric suppliers are offering an enormous variety of plans with more complexity.  Increasingly an electricity tariff can have all the complexity you would find in a cell phone plan.

Like cell phone plans, there are a number of different components.  The simplest electricity tariffs consist of simply a base charge and consumption charges, like this one from the Knoxville Utility Board.

  • Basic Service                    $10.00
  • Energy Charges               8.529¢/kWh

From this starting point, the utilities start to add complexity.  The first change to rate structures is usually adjusting the price by season.  Increased demand for electricity in the summer due to air conditioning is converted into higher prices in the summer.  Similarly, utilities will often charge different per kWh rates above and below certain consumption threshholds. The default tariff for Georgia Power has both features:

  • Basic Service Charge        $9
  • Winter Energy Charges (Oct – May)
  1. 0 – 650 kWh                        5.0633¢/kWh
  2. 651 – 1000 kWh                 4.3443¢/kWh
  3. Over 1000 kWh                 4.2670¢/kWh
  • Summer Energy Charges (Jun – Sep)
  1. 0 – 650 kWh                        5.0633¢/kWh
  2. 651 – 1000 kWh                 8.4166¢/kWh
  3. Over 1000 kWh                 8.6701¢/kWh

Yet more complex are the time-of-use rates that are being added by utilities all over the U.S. as they roll out smart meters.  With these rates, the price of electricity changes according the to the hour of the day and the day of the week.  These are usually used in concert with seasons to create rates that vary dramatically throughout the year, like in this time-of-use tariff from Nevada Power:

  • Basic Service Charge         $9
  • Base Energy Rate               5.215¢/kWh
  • Summer Rates (Jun – Sep)
  1. On-Peak (1 PM – 7PM)    24.873¢/kWh
  2. Off-Peak                                2.818¢/kWh
  • Winter Rate                          1.616¢/kWh

Lastly, there’s one more charge type that’s rarely used for residential electricity tariffs but is a cornerstone of electricity tariffs for businesses; the demand charge.  The demand charge measures peak usage and is discussed in more detail here.  To end this post, I’ll leave you with a tariff that includes demand charges, time-of-use and seasons from Arizona Public Service:

  • Basic Service Charge          $0.21/Day
  • Metering                                $0.17/Day
  • Meter Reading                     $0.06/Day
  • Billing                                    $0.06/Day

Delivery Charges

  • Summer  (May – Oct) w/ On-Peak (9 AM- 9PM)
  1. Demand                                 $3.38/kW
  2. On-Peak Consumption      1.125¢/kWh
  • Winter On-Peak (Nov – Apr) w/ On-Peak (9AM-9PM)
  1. Demand                                 $1.85/kW
  2. On-Peak Consumption      1.38¢/kWh

Generation Charges

  • Summer  (May – Oct) w/ On-Peak (9 AM- 9PM)
  1. Demand                                 $8.49/kW
  2. On-Peak Consumption      6.003¢/kWh
  3. Off-Peak Consumption      2.034¢/kWh
  • Winter On-Peak (Nov – Apr) w/ On-Peak (9AM-9PM)
  1. Demand                                 $6.30/kW
  2. On-Peak Consumption      3.065¢/kWh
  3. Off-Peak Consumption      1.699¢/kWh

As you can see there are a lot of factors that need to be considered in order to select the best electricity tariff for an individual circumstances.  That’s why we provide all of this data through an easy to use RESTful API. Beats the heck out of having to read documents like this 477 page PDF from Commonwealth Edison.  Leave that to us.

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2 Trackbacks

  • By A Problem of Understanding on June 15, 2011 at 11:23 am

    […] for them to reduce their electricity bill in a meaningful way! For anyone who has ever analyzed an electricity tariff before, this shouldn’t be too […]

  • By Electricity Bills Are Not Created Equal on August 24, 2011 at 11:53 am

    […] This is almost the whole story…not every utility plan was created equal. It all comes down to the electricity tariff you are on and what tariffs are available to you.  Features like time of use charges, price per […]

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