Electric Bill is More Than the Energy

Published by Bob Hance on Tuesday, April 5, 2022 in Community

I challenge you to take a quick stroll around your home and note how many electric outlets you have that are not in use. My own experiment revealed two, with several maximized many times over with the help of power strips.

The lowly electric outlet is perhaps the most used and least appreciated and understood item in your home. Outlets are coveted as family members compete for the precious space to power everything from refrigerators and coffee makers to computers and cell phones. In 2020, we collectively used four trillion kilowatt-hours as a nation, and that number is expected to reach 5.2 trillion kilowatt-hours by 2050. I can’t wrap my brain around figures like that, but it’s clear that we love our electricity and everything it allows us to do!

We tend to think of our electric experience just in terms of the kilowatts, but the outlet that brings immediate gratification is otherwise useless without the many behind-the-scenes elements that must be in place for you to access service when you need it.

Behind your energy consumption is a huge and costly delivery infrastructure that offers power at the flip of a switch. These are the fixed costs that exist, regardless of whether your meter ever turns, and include items like substations, poles and wires, labor, equipment, vehicles, and more. It’s also daily activities like maintaining and improving system reliability, processing bill payments, and having people available 24/7.

In 2021, we commissioned a cost-of-service study to determine if the current monthly service charge still accurately represented our fixed costs. This was a comprehensive, deep-dive study done by an independent third-party consultant with no vested interest in cooperative or the outcome, and it showed our actual fixed costs are higher than what we are currently charging.

Since we are a non-profit company, we only require enough revenue to meet our bank’s requirements. Currently, some of our fixed costs are being covered in your distribution charge,  which is based on how many kilowatts run through your meter. The study results show that customers who use more energy are paying more than their share. Your Board of Directors believes this should be corrected.

There will be a special, open meeting on April 26 at which the board will vote on a proposed increase to the monthly service charge, putting us closer to everyone paying a fair and appropriate share of the fixed costs. See page 17 for more information.

Your board of directors has many tough conversations, many revolving around rates. It’s not something that is taken lightly. However, as a customer-owned cooperative, we need to appropriately assign costs so that no group of users is subsidizing another. And because we’re carrying some of our fixed costs in the variable distribution charge, customers using more kilowatt-hours are subsidizing those using fewer.

About The Author

Bob Hance

Bob Hance is the President/CEO of Midwest Energy & Communications.