Electricity Policy


Last updateThu, 16 Mar 2017 7pm

ISSN 2331-1223  Twitter

Charge Without a Cause? Assessing Electric Utility Demand Charges on Small Consumers


 By Paul Chernick, John T. Colgan, Rick Gilliam, Douglas Jester, and Mark LeBel

Imposing demand charges to which customers cannot properly respond and that have no relationship to controlling utility costs would be ineffective and punitive. There are simpler, better means to achieve desired objectives.

Introduction & Overview


here has been significant recent attention to the possibility of including demand charges in electricity rates charged to residents and small businesses. Electric utilities historically have served these small customers under a two-part rate structure comprised of a fixed monthly customer charge that recovers the cost of connecting to the grid and an energy charge (or charges) that recover all other costs. Much of this attention to the issue of demand charges for small customers has been initiated by electric utilities reacting to actual or potential reductions in sales, revenue and cost recovery. 

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