Tiered rates electricity
tiered (or step) rate This is one of the more common residential rate programs used by utilities. One would think the concept of this rate would be to encourage conservation by charging a higher rate as the usage increased. With tiered rates, the first 500 kilowatt hours (kWh) of electricity used during a summer month are billed at a lower rate; all subsequent kilowatt hours are billed at a higher rate. The rate for the first 500 kwh of electricity is actually lower under tiered rates than what the summer rate would have been if we had not implemented tiered rates.