Time is money: Comparative impacts of volumetric and demand charges

Abstract

Renewed interest in electric rate design for small customers due to the proliferation of new technologies for consuming, shifting, and generating energy suggests the need for comparing the effects of demand-based rate design concepts with the status quo of energy-only rates. The article finds various forms of demand charges subvert the customer-demand/utility-cost relationship, and concludes time-varying rates are simpler, avoid customer confusion, and remove the information barrier from the customer transaction, providing actionable price signals.