What are customer classes?

Customer classes are the broad rate groups used to allocate costs for rate design. In California the main rate classes are residential, commercial/industrial, agricultural and street lighting.

Rates are ideally based on cost causation. Rates for each class of customer are proportionate to the costs of serving that class of customer. For larger non-residential customers, rates may be based on a customer’s demand in kilowatts (kW), as well as energy usage in kilowatt-hours (kWh).

The definition of a customer or rate class is included in a utility's tariff book.

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