That's demand pricing, which is the other pricing option.
The two models I am familiar with:
- Normal tiered pricing. Low usage is cheap per kWh; high usage is expensive per kWh. This is because of inflexible production capacity.
- Demand rates. You pay a large fixed price, get a lower kWh price, and (this is key) contractually agree to never exceed X amperes. The higher X is, the higher your fixed price. This is a special plan structured for people who need a lot of power, but only at a modest rate of consumption- think baseboard heaters. Again, this model is constrained by inflexible production capacity.
The two models I am familiar with:
- Normal tiered pricing. Low usage is cheap per kWh; high usage is expensive per kWh. This is because of inflexible production capacity.
- Demand rates. You pay a large fixed price, get a lower kWh price, and (this is key) contractually agree to never exceed X amperes. The higher X is, the higher your fixed price. This is a special plan structured for people who need a lot of power, but only at a modest rate of consumption- think baseboard heaters. Again, this model is constrained by inflexible production capacity.