An Overview of Bill Factors
The primary reason that calculation rules exist is to define how much to charge for the services sold by your company. When you create calculation rules, you have four ways to indicate how much to charge:
• Specify the value directly in the calculation rule.
• Define that the value is defined in a bill factor.
• Define that the value is calculated by a for calculation purposes only calculation rule.
• Tell the calculation rule to call an algorithm to get the price.
The remainder of this section describes the bill factor approach. The other methods are discussed in Case Study: Three Simple Rates and in Designing Rate Components .
Bill factors are used to pass a value to a calculation rule; such as specifying a tax rate. To further illustrate this, you could specify the current tax rate, say 6%, directly in every rate's calculation rules OR you could indicate every rate should levy the current state tax rate and have the system look up the applicable rate when it calculates bills. The latter approach involves using a bill factor to indicate that the amount to charge should be retrieved from someplace other than the calculation rule when a bill is calculated.
You can use bill factors to define any of the following types of charges:
• A flat amount. This would typically be used to define service charges, minimum charges, and asset charges.
• An amount for a given unit of measure. This would typically be used to define the price for measured consumption (such as, the price per therm).
• A percentage. This would typically be used for tax rates and discount percents.
As a rule of thumb, you would use a bill factor (rather than specify the value in the calculation rule) when any of the following situations exist:
• The same charge exists in many rates. For example, if there are three rates that all contain the same service charge, it would make sense to use a bill factor to levy this charge rather than specify the same value on three calculation rules.
• The amount being charged is dependent upon some physical characteristic of the customer's equipment. For example, if the price differs depending on whether the customer owns the transformer, you would use a bill factor to specify the price.
• The amount being charged is dictated by some external organization and therefore can change independently from the rate. For example, tax percentages and use fees are set by taxing authorities and can be changed at any time (and you don't want to change the rate when these charges change).
• The amount being charged varies depending on WHERE the customer lives. If you have a rate where the price per gallon differs depending on where the customer lives, you should use a bill factor to levy this type of charge.
• A charge (or discount) is only levied for a subset of customers for defined periods of time. For example, if you have a discount that is only given to customers who have had service for more than two years, you would use a bill factor to specify the discount percent.
• The price differs per customer. For example, you may have a rate for large gas customers where the price per therm is different for every customer. In this situation, you would use a bill factor to specify the price.
• The price differs based on the number of weeks of consumption. This typically occurs in a deregulated environment when the price charge is based on the weighted average spot market price in effect during the bill period.
Warning: 
As you can deduce, bill factors are extremely flexible. While the flexibility makes for a very powerful rate engine, it also presents you a dizzying array of options. We have discovered that to take advantage of the flexibility, you need to gain an overall understanding of the pricing and taxation provisions in ALL of your rates. Only then can you make logical and pragmatic decisions in respect of the number and type of bill factors.