[unpopular42]

If this was the case, it would make sense to charge for capacity, not for usage. Like, if you ever want to use more than X amps of electricity, you have to pay for upgraded wires and stuff. Doesn't explain charging less for first X units per month.

[stordoff]

I disagree - charging for usage (even if most of your costs come from capacity) incentivises people to use less power, which means you need less grid capacity and reduces externalities (pollution due to generating). If I'm paying for 100A _regardless_, for the things I need to run at peak (say kettle+washing machine+hoover), there's little incentive to reduce my usage at other times (switching lights/devices off when they aren't in use); if I'm paying for usage, there's a very direct incentive to turn things off I'm not using (it's costing me money).

[vertex-four]

People expect to be charged for amount used, not capacity, so changing it is very hard.

[unpopular42]

See the OP. They are not charged the amount used. They are charged some weird function of amount used, the rate it was used at, and their home size.

[iaw]

They are charged based on their amount used relative to their fair allocation.

If they use more than their fair allocation everyone else on the grid is subsidizing them so they get charged more to prevent a subsidy. If they use less than their fair allocation they subsidize other people so they're charged less to prevent subsidy.

The electric grid and the electricity that flows over it is a public utility not a commodity.

Edit: Is unpopular42 a throwaway account that you upvote with your main?