ENERGY: NEW TARIFFS

ENERGY: NEW TARIFFS

I have advocated the need for pricing to reflect reality: the electricity sector has changed a lot in recent decades. But not the pricing structure!

My suggestion is simple conceptually.

BACKGROUND

1. Investments in the electrical system are a function of $/kW installed
2. The amortization cost of the investment is the largest one and associated with the $/kW installed
3. The bulk of the electricity matrix is becoming renewable
4. Thermal plants – typically – will only be dispatched when necessary

ANALYSIS

1. The cost of the renewable electrical system is essentially a fixed one
2.Thaat of thermal systems is a variable one

PROPOSAL

1. Pricing in a fixed monthly cost, mode depending on the kW contracted by customers
2. Variable cost pricing depending on ISO’s dispatches associated to thermal plants

RESULTS

1. Primarily fixed $ amount per month
2. Includes variable costs only when thermal plants are dispatched
3. Agnostic modeling in relation to sources contracted by clients

COMMENTS 

1. Currently the demand component is a lower cost of the total bill
2. The item that really matters is consumption
3. In the new format it would be the opposite!

BENEFITS

1. Focus on the most relevant cost that affects the reality of the electricity sector
2. Choices across the entire value chain based on actual cost merit

If you would like to delve deeper into this idea, do not hesitate to get in touch!