Discussion
A ratchet clause in a tariff makes the billing demand
Answer: B
Correct answer: a stated fraction of the contract demand at minimum
A ratchet sets a floor under the billing demand, typically 75 or 80 per cent of the contract demand, so that a consumer who has asked the utility to hold capacity available pays for it even in a month when little is drawn. The capacity cost is incurred whether the consumer uses it or not, which is what the clause recognises.
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