Block Price Rate Undertake Calculation Example

Learn how to calculate undertake price.

Client overrides the default Undertake calculation.

For Undertake, the Customer invoice has two charges

• Actual usage at base rate
• Under usage charge at base price – undertake price

For undertake, the Customer is charged the actual usage at base rate, and the difference outside the Block Price rate at the rate equals to (base rate – undertake rate). For Example:

• Base Fixed Rate: 0.985 per therm.
• Expected Usage Range: 13,500 – 16,500
• Actual usage: 12,506
• Undertake Rate (with adder): 0.789 per therm.

Then, the undertake volume is: 13,500 – 12,506 = 994 therm. The two charges are:

• Actual usage of 12,506 therm at the base rate of 0.985, the actual charge is: 12,506 * 0.985 = $12,318.41
• Under usage charge of 994 therms at base price – undertake price: 994 * (0.985 – 0.789) = $194.824

Total charge is: $12,318.41 + $194.824 = $ 12,513.234

Another way to calculate is: Customer is responsible for his expected usage of 13,500; he is charged at the rate of 0.985. However, his actual usage is 994 lower than this, therefore he is refunded this difference at the undertake rate. His charge is:

(13,500 * 0.985) – (994 * 0.789) = $ 12,513.234