The components of your electric bill
Have you ever wondered what costs go into your electric bill and how your electric bill is determined? Is it not just the amount of kWh used? While kWh used is part of your bill, there is another part of your bill, the customer charge, that may not be as obvious in how it is determined.
Just like you, the member, Rural Electric receives an electric bill. Western Farmers Electric Cooperative sends us a bill of which 67.3 perecent is a variable cost which includes the fuel/energy charge, while 32.7 percent is a fixed cost which includes maintenance, high voltage transmission and transformer cost. However, of the member’s electric bill 10.3 percent of it is a fixed cost - the customer charge - while the remaining 89.7 percent is the variable cost.
Recently, REC had a cost of service study conducted by C.H. Guernsey to identify the cost of distributing electricity to our members’ homes. From the study, it was determined the fixed cost to have an active meter available and ready to deliver electricity is $46.41 a month. Currently, REC is charging $14 per month to provide an active meter. This is the same price charged since February of 2011. Right now, the difference between $46.41 and $14 is collected in the kWh sales portion of your bill.
While we haven’t had a rate increase since 2011, the cost of everyday supplies needed to provide electricity continues to increase in price, so less of the fixed cost of your electric bill is going to the rising fixed cost of REC’s electric bill. Poles that cost $231 five years ago, now cost $271. Five years ago, transformers cost $786 and now cost $855. Plus, reclosers which are used to protect our equipment and our members’ homes used to cost $2,295, but have been improved and now cost $5,276.
Our goal is to provide safe, reliable electricity at an economical and stable price. With a continual increase in fixed cost, REC’s Board of Trustees and management had to find a way to bridge the gap between what it costs to have a meter available and what is being recovered from the monthly customer charge. Beginning in March, there will be slight rate increase in the customer charge. For the next two years, the customer charge will increase slightly. The Board of Trustees felt this was the best way to combat the current situation while not burdening the membership. The good news is the wholesale electricity generation rate, which is the variable cost, should remain stable for the next three to five years.
REC’s rate philosophy includes: rates should be fair and equitable; rates should generate enough revenue to cover the cost of providing the service; rates should reflect why costs occur and what caused the costs; while also promoting energy efficiency, remaining competitive and avoiding abrupt changes.
We encourage our members to be good stewards of their electricity and use it wisely. Keep in mind, the variable cost is the biggest portion of your electric bill and it is determined by you and how you decide to use your electricity.