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It is regressive. If there is a fixed fee then a small user pays a higher percentage then a large user. In order not to have to build new generators the utility should encourage conservation not discourage it.
If I get on a turnpike I don't pay the same fee for a short travel time as I do for traveling the whole turnpike. Sometimes fees are rated on the number of axles or gross weights. Those who use more should pay more. It makes no sense to charge a small user a effective rate of 20 cents a kwh and a large user 10 cents.
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