Keith Herrmann: Tiered rates fair

April 16, 2013 

Tiered rates fair

Stores charging different prices for different units sold can be seen everywhere. When a restaurant offers customers three sizes of drinks, that’s an example of “tiered pricing.” At a restaurant, the cost per additional ounce over the ounces received in the small drink declines for the medium drink and then declines again for the large drink.

In a similar manner, the City of Durham’s Water Management Department has been using a tiered rate structure for water rates for several years. Unlike the restaurant, customers using less water pay less per unit of water consumed, and Durham charges more per unit for extra consumption. As customers use more than certain amounts, then they move to higher tiers and pay more per unit consumed.

Given the N.C. Supreme Court’s recent rejection of Duke Energy’s rate recommendation, I believe now is the time for Duke Energy to develop a tiered-rate structure for electric rates. Tiered electric rates would be more fair and would help encourage energy conservation.

Keith Herrmann


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