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Cheaper rates for using more power?

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KAI RYSSDAL: Differential pricing for utilities is nothing new. You pay less for your electricity when you run your big appliances during off-peak hours than you do if you crank things up in the middle of the day. But here in Los Angeles, today city officials floated a slight variation on that theme. Lower rates for people who use more electricity. Marketplace’s Lisa Napoli explains it’s a growing trend.

LISA NAPOLI: The proposal in Los Angeles mirrors what’s happened at utilities in many parts of the U.S. People who live in hotter parts of a city pay a slightly lower rate for the extra electricity that they use.

RALPH CAVANAGH: This is clearly the wave of the future in terms of the way to set electric rates, and it only makes sense.

That’s Ralph Cavanagh of the Natural Resources Defense Council.

CAVANGH: So you want the principle to be the more you use, the more you pay. And you want the principle also to be that people who are in extreme climate zones get a higher baseline allocation of inexpensive power because it takes more power to meet their basic needs.

The way the map has been drawn in Los Angeles, that means people in a wealthier part of the city might actually get a break after they use a certain volume of power. While poorer people in other warmer parts of L.A. may not. And that’s what worries consumer advocate Jamie Court.

JAMIE COURT: The real problem here is this could be a form of energy redlining. Across the country, we see pockets that will get this type of break because they’re politically important to the politicians and to the regulators.

Cavanagh of the Natural Resources Defense Council says discrimination isn’t the issue. Balancing the load is.

CAVANAGH: It’s not that the rates are different. The point at which the higher rates kick in is different.

Cavanagh says something else is different, too. Back in the ’60s and ’70s the power companies were offering incentives to promote consumption.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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