Why Some US Electric Utilities are Experimenting with Flat-rate Pricing


Quartz article featuring Uplight's new product called Plus

Cell phones. Data plans. Movie and music streaming. Home energy bill?

The subscription craze has finally reached electric utilities in the US. At least three companies are testing a new billing model that charges users a flat monthly rate regardless of how much electricity they consume. Utilities are hoping it ushers in the era of a more efficient, greener grid.

How electricity bills work

For more than a century, electricity bills came in one flavor: pay per kilowatt-hour. Initially, that price was fixed. But in the 1970s, US utilities began to experiment with dynamic pricing models, in which the cost per kilowatt-hour varied throughout the day depending on demand, similar to surge pricing on a ride-share app. In theory, dynamic pricing allows utilities to avoid switching on high-cost “peaker” plants, typically fueled by natural gas, and promotes energy and cost efficiency across the system.

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