Inclining Block Rate Structure
A seasonal rate structure has a unit rate (cost per gallon) that increases as the volume of water used increases.
Inclining block rate structures send a very strong price signal to customers that increasing usage results in increasing cost, reflecting the cost structure of a utility that is nearing a capacity threshold or is having difficulty securing sufficient quantities of source water.
Inclining block rate structures offer a limitless degree of flexibility in matching the rates to the needs of the utility. The drawback to this flexibility is that the rate structures can become so complicated that customers do not understand them. As a result, customers don't know how to alter their consumption behaviors to lower their utility bills. The challenge for rate designers is to provide enough flexibility so that the rate structures appear to be "fair," while still keeping them simple enough to be understandable.