In California, electric rates increase with usage Click for link to details. An example consumer is entitled to a baseline allowance of energy (303 kWh) that is billed at the lowest price ($0.22376/kWh). Above this usage up through 4 times the baseline amount, additional electricity is charged at a higher rate ($0.28159/kWh). All electricity use in excess of 4 times the baseline amount is billed at a high use surcharge rate of $0.49334/kWh. This is an example of a tiered pricing system.

Draw a budget constraint for a consumer who has $500 to spend on electricity and another good which costs $1 per unit. Put electricity consumption on the x-axis and other goods on the y-axis