Electricity Tariff Glossary

Since we launched Genability at the end of last year, we’ve been often asked for a quick start to understanding electricity tariffs.  With that in mind,we put together a simple glossary of electricity tariff features, complete with links to Genability Explorer for examples (You’ll need to be logged in for the links to work).  If you haven’t already registered with Genability Explorer, sign up today for a 30-day free trial.  Enjoy!

Fixed Costs - This is a cost that is incurred regardless of the amount of electricity used.  Often tied to the number of meters on the account. (see the Customer Charge here)

Consumption Rates - These rates bill the customer for what they consume, measured in kWh.  They almost always the biggest component of electricity costs. (see the Delivery Service Charge here)

Demand Rates - These rates bill the customer for peak usage during the month, measured in kW.  Each utility has a custom definition of demand.  A typical definition would be “the peak 15-minute period in the past 30 days during peak hours”. (see the Demand Charge here)

Seasonal Rates - All rates may change depending on the season, with summer rates generally running higher than winter rates.  Again, each utility has a custom definition of seasons.  Usually there are only two seasons defined Summer and Winter. (see the Service Charge here)

Time-of-Use (or Time-of-Day) Rates - Any rate may change according to the time of day (and in most cases, season) when the power is used.  Power used at peak times (Late afternoon in the summer, early morning/early evening in the winter) is more expensive than off-peak.  For electric vehicle specific tariffs, there is often a super-off peak overnight designed for car charging. (see Generation here)

Rate Tiers (or Inclining Rate Blocks) - In tiered rates, the amount of electricity consumed determines the marginal rate you are charged for electricity.  The price can go up or go down as the consumption or demand increases.  (See the Energy Charges here)

Riders - Riders are rates that are applied to more than one of a utility’s tariffs.  One of the most common is a Fuel Cost Adjustment Rider, that applies a standard cost of fuel to all tariffs.  Riders are often updated more frequently than the tariff as a whole.  (See the Fuel Cost Recovery Schedule here)

Applicability - Not all customers are eligible for all rates.  The simplest example of applicability is the distinction between residential and general tariffs, but there can also be restrictions based upon whether or not the customer has electric heat (and/or electric hot water heating), is inside or outside city limits or has a single- or three-phase connection. (see this tariff)

**Critical Peak (or Peak Day) Pricing - **Many utilities offer consumers a critical peak pricing.  This is an extreme time-of-use rate structure that has lower rates for most of the year BUT charges punitive rates whenever a Critical Peak event is declared.   Each utility has custom definitions of what defines a critical peak, how long it lasts, how much notice the customer is given and the frequency of events. (see the PDP Charges & Credits here)