In 2004, Nova Scotia Power Incorporated (NSPI) applied to the Nova Scotia Utility and Review Board (UARB) for increases in all its rate classes. In the Domestic Service Tariff, NSPI has proposed an increase of 10.22 percent, from 8.61 cents per kilowatt-hour to 9.49 cents per kilowatt-hour. Applying this new rate to 2003 sales figures, NSPI would be expected to earn about $374,044,398.
NSPI's Domestic Service Tariff is referred to as a Flat Rate model, in which all customers are subject to the same price per kilowatt, regardless of the total electricity consumed and the system demand at the time of consumption. Despite its simplicity, the flat rate is not cost reflective, often resulting in cross-subsidization, and does not allow the energy supplier to create price signals.
Although other, more progressive billing schemes, such as time-of-usage billing, exist, some electrical utilities and their customers are reluctant to adopt them because of the cost of replacing existing induction meters (used in flat rate metering) with electronic interval meters.
The Inverted Block Rate is an alternative to the Flat Rate that does not require the replacement of the customer's induction meter. In the Inverted Block Rate, the customer's consumption is divided into blocks; each block has a price per unit of energy consumed, which increases with each succeeding block. The customer's bill is simply the sum of consumption per block multiplied by the energy price associated with each block. By varying each block's price, the utility can introduce price signals as well as addressing the issue of cross-subsidization.
The following web page contains Larry Hughes's submission to the UARB, outlining the reasons why NSPI should abandon its residential Flat Rate structure in favour of the more progressive Inverted Block Rate model.
The following documents were included in the submission to the UARB:
Contact Larry Hughes for more information.
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Last updated: 25 November 2004