Fixed bill refers to an energy pricing program in which a consumer pays a predetermined amount for their total energy consumption for a given period. The price is independent of the amount of energy the customer uses or the unit price of the energy. Energy companies can offer this type of pricing by hedging the risks of fluctuating demand using weather derivatives.

History

The ability to provide fixed bill energy contracts in the US grew out of the deregulation of the energy industry in the 1990s. An early pioneer in this field was Equitable Gas Company. They proposed a one-year, fixed-bill natural gas contract to

Allegheny County, PA Allegheny County () is a county in the Commonwealth of Pennsylvania. It is located in Southwestern Pennsylvania. As of the 2020 census, the population was 1,250,578, making it the state's second-most populous county, following Philadelphia C ...

public schools in 1995. The two inventors of the Equitable Gas product, Bernard Bilski and Rand Warsaw, then left Equitable and formed their own company, WeatherWise USA. Rand Warsaw is now CEO of the company. They have further developed the product and now offer a variety of fixed bill plans to energy companies under license. The energy companies, in turn, offer the plans to their customers.

Patents

On April 16, 1996, Equitable Gas filed a patent application on their process. The inventors were Equitable employees, Bernard Bilski and Rand Warsaw. The title was “Energy Risk Management Method”. It had a description of a method for hedging the weather-related risk that contributes to fluctuating demand in a fixed bill pricing scheme. It has been viewed as a “pure”

Business method patent Business method patents are a class of patents which disclose and claim new methods of doing business. This includes new types of e-commerce, insurance, banking and tax compliance etc. Business method patents are a relatively new species of paten ...

and was rejected by the USPTO examiner, the USPTO board of appeals, the

Court of Appeals for the Federal Circuit The United States Court of Appeals for the Federal Circuit (in case citations, Fed. Cir. or C.A.F.C.) is a United States court of appeals that has special appellate jurisdiction over certain types of specialized cases in the U.S. federal court ...

(case

In re Bilski ''In re Bilski'', 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008), was an ''en banc'' decision of the United States Court of Appeals for the Federal Circuit (CAFC) on the patenting of method claims, particularly business methods. The Federal C ...

) and the

US Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point of ...

(case Bilski v. Kappos). Numerous other patent applications have been filed with several having issued. The patents cover different variations of fixed bill offerings.

Commercial products

The following companies design fixed bill products and license them to distributors, such as utilities: *WeatherWise USA *Christensen Associates The following energy companies offer fixed bill programs directly to consumers: * Nicor * Wisconsin Public Service Corporation *

Duke Energy Duke Energy Corporation is an American electric power and natural gas holding company headquartered in Charlotte, North Carolina. Overview Based in Charlotte, North Carolina, Duke Energy owns 58,200 megawatts of base-load and peak generation in ...

Alliant Energy Alliant Energy is a public utility holding company headquartered in Madison, Wisconsin, providing power in Iowa and Wisconsin. History Interstate Power and Light Company (IPL) expanded greatly in the late 1920s to include operations in Iowa, ...

We Energies In Modern English, ''we'' is a plural, first-person pronoun. Morphology In Standard Modern English, ''we'' has six distinct shapes for five word forms: * ''we'': the nominative (subjective) form * ''us'' and ': the accusative (objective; ...

Levelized payment

A Fixed Bill plan is different from a more traditional Levelized Payment plan. In a Levelized Payment plan, a consumer is billed an equal amount per month for a year based on their prior energy use. At the end of the year, however, the consumer will be billed for excess energy they may have used, or get a refund if their actual energy use was less than projected. In a Fixed Bill plan, what a consumer pays is independent of what they use.

Controversy

Fixed bill pricing programs have been investigated by States Attorneys General when participants' bills have been higher than nonparticipants' bills.{{cite web, url=http://www.law.com/jsp/article.jsp?id=1206960399823, title=Law.com, website=Law.com In 2007, for example, Minnesota shut down a fixed bill program run by

Xcel Energy Xcel Energy Inc. is an American utility holding company based in Minneapolis, Minnesota, serving more than 3.7 million electric customers and 2.1 million natural gas customers in Colorado, Texas, and New Mexico in 2019. It consists of four oper ...

and CenterPoint Energy when most participants paid higher than average bills for four out of five years.

References

External links

Christensen Associates Fixed Bill page
Energy economics Electric power Derivatives (finance) Financial risk