> based on the actual costs to the electric provider
They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.
They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.
That's not necessarily because grid costs + generation costs were separate.
If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).
Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.