associated with this coincident demand from all customers does not comply with principles of cost causation. All customers, to some extent, are causing the need for expanded infrastructure to cope with high levels of coincident demand. While SEIA does try to empirically connect high usage with high demand, therefore making their proposal more accommodating of cost causation, they offer little evidence of this relationship. IREC’s proposal is also not well-aligned with the principle of cost causation. High-usage customers are not solely responsible for the generation and marginal generation capacity costs of a utility (i.e., the construction of new energy facilities), and therefore they should not be required to shoulder the entire burden of such costs. A two-tier rate with 25% differential will encourage overall conservation while reducing bill volatility. Twenty five percent is an increase over the last tier differential approved by this Commission. It is aligned with the Commission’s principle for cost-based ratemaking and at the same time retains a price signal to customers that increased usage will result in increased price. Because low usage customers will pay closer to the cost of service, they may elect to conserve more. In addition, the flatter tier structure will result in fairer and more equitable pricing for all residential customers. Low usage customers will pay prices that are closer to the costs incurred to serve them. High usage customers will see a price decrease, but will still pay more than the cost of service. For low income customers, programs to protect against high bills continue to be available, such as the CARE, FERA and medical baseline programs, the Energy Savings Assistance (ESA) Program, and other programs for low-income customers that address non-energy burdens.
associated with this coincident demand from all customers does not comply with principles of cost causation. All customers, to some extent, are causing the need for expanded infrastructure to cope with high levels of coincident demand. While SEIA does try to empirically connect high usage with high demand, therefore making their proposal more accommodating of cost causation, they offer little evidence of this relationship. IREC’s proposal is also not well-aligned with the principle of cost causation. High-usage customers are not solely responsible for the generation and marginal generation capacity costs of a utility (i.e., the construction of new energy facilities), and therefore they should not be required to shoulder the entire burden of such costs. A two-tier rate with 25% differential will encourage overall conservation while reducing bill volatility. Twenty five percent is an increase over the last tier differential approved by this Commission. It is aligned with the Commission’s principle for cost-based ratemaking and at the same time retains a price signal to customers that increased usage will result in increased price. Because low usage customers will pay closer to the cost of service, they may elect to conserve more. In addition, the flatter tier structure will result in fairer and more equitable pricing for all residential customers. Low usage customers will pay prices that are closer to the costs incurred to serve them. High usage customers will see a price decrease, but will still pay more than the cost of service. For low income customers, programs to protect against high bills continue to be available, such as the CARE, FERA and medical baseline programs, the Energy Savings Assistance (ESA) Program, and other programs for low-income customers that address non-energy burdens.