> People who consume small amounts of a utility still pay more because of people who consume a lot. No, they really don't. People consuming small amounts and l

> People who consume small amounts of a utility still pay more because of people who consume a lot. No, they really don't. People consuming small amounts and large amounts both pay more due to higher aggregate demand. If it weren't for the many small users the aggregate demand would be lower and the large users would also be paying less—do you consider that a subsidy in the opposite direction? No, of course not—because a price being bid up by competing consumers is not what is meant by the term "subsidy". Now, if you banned large users from the system, or imposed discriminatory pricing as you previously suggested for the purpose of keeping prices low for the small users, that would be a subsidy: interference in the market to benefit one group at the expense of another.