An eastern Iowa "think tank" suggests it’s time to change the way customers are charged for the electricity they use in their home.
Today, the cost of the first watts you use are higher, but as you use more electricity, the per-watt charges decrease. Iowa Public Policy Project researcher Christine Ralston says that doesn’t encourage conservation.
"If anything, this…structure incentivizes consumption because energy gets cheaper the more you consume," she says.
Ralston suggests a flip — making the first watts of electricity cheaper and gradually increasing charges as you use more and more electricity in your home. In addition, Ralston suggests the electric rates for low income households start at a lower point.
"So what this does is (it) makes the energy more affordable for low income consumers, but it preserves the conservation incentive for everyone," Ralston says. "Low income, middle income, high income consumers — for all of them, their bills are going to get more expensive (the more energy they use) — just at different rates."
According to Ralston, state utility regulators have the authority to impose this kind of change and the investor-owned utilities in Iowa could enact it on their own, too.
Ralston calls this idea of charging less for the first watts used and more as a household uses more electricity an "inverted block rate structure." She points to the city-owned utility in Waverly, which has enacted this kind of a plan for residents.
"(Waverly) has separate schedules for the summer and winter months. Their winter is actually a flat rate, so all kilowatt hours of use are charged the same price per kilowatt hour in the winter," she says. "But in the summer, they have the inverted block rate structure to encourage energy conservation."
The State of New Mexico, for example, has this kind of system in place for electricity charges, with a requirement that New Mexico’s poorest residents get cheaper electric rates.