Another term for discriminatory pricing, or the setting of rates which discriminate against customers by setting prices which do not accurately reflect costs.

Undue discrimination can work in both directions. A private energy provider may offer a large industrial customer a rate below the utility's cost in return for the prestige of having that customer, and pass the losses from serving this customer along to other customers. Alternately, the provider may overcharge one or more customers for arbitrary reasons, perhaps as a means of sending a price signal that the customer is not wanted by the provider.

Undue discrimination is frowned upon at all levels of the energy industry, from regulating bodies at the top all the way down to the consumer level, because electricity is considered to be an essential resource. Public and private industry players alike try to discourage and prevent discriminatory practices.

See also: