Electric rates can be structured a number of ways.
"D-E-C" rates contain a demand charge, energy charge and a customer
charge. Hours-Use rates, often called block rates, have more than one
energy charge that varies according to the customers hours-use or load
factor. A declining block rate has energy charges which decrease as
hours-use increases. An inclining block rate has energy charges which
increase as hours-use increases. Hours-Use rates may or may not also
contain demand and customer charges.
Time-of-day and seasonal rates contain separate charges applicable to the
customer's usage measured during defined periods. The demand charge and/or
the energy charge may be time differentiated or vary by season.
Interruptible and curtailable rates provide discounts for the customer
agreeing to reduce load upon notice. Some interruptible rates may allow
customers to buy-through during certain conditions, requiring the customer
to reduce load only during critical periods (i.e. system emergencies).
Curtailable rates usually allow customers to curtail on a voluntary basis,
however, usage consumed during curtailment periods is priced at a higher
rate.
Real-time pricing rates contain charges that vary. Prices may be
provided by the utility to the customer via the internet, fax, telephone, or
pager, and may be provided a day ahead or a week ahead or under another
basis. Some real-time pricing rates apply to the total usage while other
real-time pricing rates are designed to apply only to incremental usage
(deviations from baseline). Real-time prices may be based on costs or may
be market based.
For the same service, one rate schedule, when applied to a particular
customer's usage, may produce an amount that is higher or lower than another
rate. A combination of factors determine which rate will be the most
favorable rate. These factors include, but are not limited to, the
customer's maximum demand level, load factor, power factor, and seasonal and
time-of day variations in load.