If you’re running a 50kW kiln (or more realistically 4 x 12kW) in your back yard then your annual use may not be that high but the grid needs to handle larger demand spikes. Paying per kWh alone doesn’t adjust for the relevant infrastructure.
It's very rare a residential house has a 50kW kiln, so those kinds of spikey loads basically balance out over a subdivision.
Although interestingly, an unintended side-effect of aggressive time-of-use pricing is the entire subdivision has programmed their air conditioners or EV chargers to turn back on right at 9pm when peak pricing ends. That kind of unintended mass-coordination DOES create sometimes-problematic high demand spikes.
There are two alternatives here. One is that your spiky demand doesn't correlate with others, in which case it's irrelevant because although 50kW is a lot for one house it's really not a big deal for the power grid. The other is that it does correlate with other spiky demand, at which point you charge everyone a higher price per kWh at those times.
You could model things with individual per customer rates per minute, but charging based on connection sizes is a lot simpler.
If the goal is simply to gouge customers, independent of use or cost, you might as well charge by height.
The grid itself needs to be paid for as does electricity production. A random neighborhood that wants a huge number of Christmas lights isn’t an issue from the production side, but it can be a real issue in terms of distribution without using enough kWh to pay for that infrastructure.
I'm not sure that either of those are solid assumptions,but worth some thought.