The Evolution of Rate Design

May 3, 2021 | Blog

Apogee Interactive’s, Joel Gilbert, P.E. and The Brattle Group’s Ahmad Faruqui, Ph.D. Economics recently joined forces to host The Rates…They Are A Changin’, an informative one-hour webinar on the ever-changing world of electric and natural gas rate design.

Ahmad Faruqui began the presentation with insightful information on how the tariffs of the past and of today will not work for the future.

Here are some current characteristics of tariffs:

  • Flat volumetric rates with low fixed charges,
  • Inclining or declining block rates with low fixed charges, and
  • Seasonal rates with low fixed charges.

Dr. Faruqui expressed that the driving catalyst for rate transformation is the customer. … “It is not the regulator, it is not the utility, it is the customer themselves.” He added, “Yesterday’s customer is today’s prosumer and tomorrow’s prosumager.” (prosumager: electric consumers who own generators, storage batteries, and at times may also sell electricity to the grid.)

Ahmad also presented the five “Immortal” objections which have delayed tariff modernization such as customers having little time or interest in becoming a home energy manager.

Joel Gilbert expressed his thoughts on consumer energy management. “Most consumers don’t know how to calculate weather normalization on their bills. If the bill happens to be higher than expected they often just react emotionally. They don’t think something might be different in the home.”

As the presentation concluded, Dr. Faruqui recommended a nine-step process for overcoming tariff objections which includes, computing bill changes and understanding which customers will see adverse bill impact.

Utilities are beginning to offer customers more rate choices. Are you ready to turn challenges into opportunities to engage and educate customers about rate changes? Learn from industry leaders and listen to this insightful presentation, “The Rates They are a Changin…” presented March 25, 2021.

If you would like to listen to the presentation in its entirety you can download the recording here or contact for more information.

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