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Zapped by the Utility: What if other industries could shock consumers like electric utilities?

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Utilities have suggested that because they have high fixed costs, they should have high fixed fees. But few other industries work this way, because of the wrong incentives it creates (see #1). The post office encourages efficient use of the mail system by charging per letter based on weight, not per customer, a policy that would make little distinction between Grandma Josie sending a birthday card to her grandson or Netflix mailing 100,000 DVDs. Starbucks charges more based on the complexity of the beverage, not $5 to enter the store. Both of these businesses have high fixed costs for employees, premises, and equipment. High fixed charges would create an unfair shift in costs to occasional users, who incur minimal costs.

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Zapped by the Utility: What if other industries could shock consumers like electric utilities?

  1. 1. For more information visit: ilsr.org/zapped-5-reasons-raising-fixed-fees-is-unfair Z A P P E D B Y U N FA I R F I X E D F E E S February 5, 2016

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