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I agree that the article is maybe not very clear in its conclusion. But one valuable thing I took from it is this pernicious tension I hadn't been aware of befo

by FabHK 5y ago

I agree that the article is maybe not very clear in its conclusion. But one valuable thing I took from it is this pernicious tension I hadn't been aware of before between pricing electricity in accordance - to actual production costs: large fixed "standing charge" (per unit of time), small consumption charge (per unit of energy) - with environmental goals: small fixed standing charge, large consumption charge. You could argue that you should just (that word is doing a lot of work here) internalise the external costs, and then price it as "undistorted" as possible. Does that lead to the right answer here?

boringg 5y ago
You end up with a bunch of other challenges. The infrastructure costs of the grid are quite high to build and operationally expensive. That cost needs to be defrayed somehow. The Time of Use (consumption charges) that aren't explained that well and differ quite significantly depending on the tariff structure you apply to. Consumption for commercial use is charged in two ways kwh that you require but also the peak kW that you need per month. This is in order to recoup the marginal cost of electricity produced at the "peak" of the month. I'm not trying to just muddy up the waters but I think the underlying analysis is overly simplistic and inaccurate. I would hate for people to think that this substack article is an accurate portrayal of the complexities of the energy system and the pricing structures. Residential rates are only portion of the grid.