Fixed bill
Encyclopedia
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
.
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.
and was rejected by the USPTO examiner, the USPTO board of appeals, the Court of Appeals for the Federal Circuit (case In re Bilski
) and the US Supreme Court (case Bilski v. Kappos
).
Numerous other patent applications have been filed with several having issued. The patents cover different variations of fixed bill offerings.
The following energy companies offer fixed bill programs directly to consumers:
In a Fixed Bill plan, what a consumer pays is independent of what they use.
and CenterPoint Energy
when most participants paid higher than average bills for four out of five years.
Weather derivatives
Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions...
.
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 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 patentBusiness 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, tax compliance etc. Business method patents are a relatively new species of patent and there have been several reviews investigating the...
and was rejected by the USPTO examiner, the USPTO board of appeals, the Court of Appeals for the Federal Circuit (case In re Bilski
In re Bilski
In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 , was an en banc decision of the United States Court of Appeals for the Federal Circuit on the patenting of method claims, particularly business methods. The Federal Circuit court affirmed the rejection of the patent claims involving a method of...
) and the US Supreme Court (case Bilski v. Kappos
Bilski v. Kappos
Bilski v. Kappos, 130 S. Ct. 3218, 561 US __, 177 L. Ed. 2d 792 , was a case decided by the Supreme Court of the United States holding that the machine-or-transformation test is not the sole test for determining the patent eligibility of a process, but rather "a useful and important clue, an...
).
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:
- NicorNicorNicor, Inc. is an energy and shipping company headquartered in Naperville, Illinois. Its largest subsidiary, Nicor Gas, is a natural gas distribution company. Founded in 1954, the company serves more than two million customers in a service territory that encompasses most of the northern third of...
- Wisconsin Public Service CorporationWisconsin Public Service CorporationWisconsin Public Service Corporation is a utility company headquartered in Green Bay, Wisconsin, and the company covers northeastern and north central Wisconsin as well as the southern tip of Michigan's Upper Peninsula....
- Duke EnergyDuke EnergyDuke Energy , headquartered in Charlotte, North Carolina, is an energy company with assets in the United States, Canada and Latin America.-Overview:...
- Alliant EnergyAlliant EnergyAlliant Energy Corporation is a public utility holding company that incorporated in Madison, Wisconsin in 1981. It consists of two subsidiaries:...
- We Energies
Levelized Payment
A Fixed Bill plan is different than 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. In 2007, for example, Minnesota shut down a fixed bill program run by Xcel EnergyXcel Energy
Xcel Energy, Inc. is a public utility company based in Minneapolis, Minnesota, serving customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Primary services are electricity and natural gas...
and CenterPoint Energy
CenterPoint Energy
CenterPoint Energy is a Fortune 500 electric and natural gas utility serving several markets in the U.S. states of Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. It was formerly known as Reliant Energy , NorAm Energy, Houston Industries, and HL&P...
when most participants paid higher than average bills for four out of five years.
See also
- Swap (finance)Swap (finance)In finance, a swap is a derivative in which counterparties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved...
- Weather derivativesWeather derivativesWeather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions...
- Electricity meterElectricity meterAn electricity meter or energy meter is a device that measures the amount of electric energy consumed by a residence, business, or an electrically powered device....
- Hedge (finance)Hedge (finance)A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...