(October 12, 2020)
The method of charging energy consumers through electricity bills has changed little over the past century. Electric customers are charged for their energy consumption, which is calculated in kilowatt hours.
Dan Seif of solar developer 7X Energy argues customers are mainly billed for infrastructure rather than electricity. The typical bill is calculated per kilowatt hour of usage, with at most a few small surcharges for meter usage and other local fees.
“This legacy charge structure does not reflect the paydown on our grid’s sunk capital costs, nor does it do much to encourage customer load changes that reduce the need for more grid infrastructure,” wrote Seif.
Seif’s alternative is to provide residential customers with the option of choosing an electricity bills structure based on how their energy usage impacts the grid.
His proposed billing system would be composed of three parts: energy usage; distribution, which would be based on the customer’s average monthly peak power usage on the local grid; and transmission, which would be calculated according to the customer’s annual peak power usage on the regional grid.