Understanding Our Electric Bill

[titelines]

Hi All,

Don't know if anyone is in the same position, but wanted to throw something out to see if someone can help me understand this better. I have asked our electric provider, but still don't fully understand.

We have our house here in the cities. The electric bill is very straight-forward. They look at our meter, figure out what we've used and bill us accordingly.

We also have a cabin that we get an electric bill for. I'm having a little more trouble figuring this one out.

Our bill is broken into a few different line items. The first is our usage. This is calculated using a kilowatt/hour charge and the number of kilowatts we've used. I'm okay so far.

The second charge is a $16.00 base charge. Every customer of this company (a Co-op) pays this every month. As far as I can tell, we pay $192.00 per year for the privilege of doing business with this company.

The third line item is a PCA charge, which is based on usage per residential service and is the same for all members. This PCA charge is evaluated every month. The company told me the reason for a PCA charge is to off-set the increased costs they pay for power. That would be fine, but we see this during the summer too, when the costs are supposedly lower.

To illustrate this, here's an example of our bill, using hypothetical numbers.

KWH Charge: $200.00

Base Charge: $16.00

PCA Charge: $100.00

Taxes etc.: $10.00

Total: $326.00

Here's my question. I'm having trouble with the PCA charge. It seems to me that I'm paying twice for the same electricity(?) Wouldn't the KWH charge reflect the costs that they incur to provide the electricity? They have a winter rate and a summer rate, which leads me to believe that they take that into consideration. I'm assuming that the cost of providing electricity fluctuates no matter the location. Why doesn't our provider in the cities tack on another charge?

It kind of bums me out to see that (using the example above) what we actually used is $200.00 worth of electricity, but our bill is over $300.00 after everything else is added on.

Can anyone explain this to me?

Also - Anyone have experience with a Co-op? This particular Co-op ran the electric along the street that our cabin is on, so we were told that we have to use them. Is there any way to switch providers?

Thanks for any/all info!

[McGurk]

Maybe density? The overhead costs of getting juice to your house in the cities is much less than getting it to a rural setting. For example, 1 mile of poles and wire could service 16 city blocks of with 8 houses on a block, or 128 houses. That same mile of poles and wire may only service a few house in a rural setting.

I do not know this for sure, I am only guessing. Looking forward to hearing some other answers.

[Surface Tension]

power cost adjustment(pca)

The kilowatt hour rate is set.

The PCA fluctuates with the price of fuel to generate electricity and fuel delivery costs.

Price of coal goes up or fuel, so does the PCA.

Sort of like, "no new taxes" but you have more user fees.

[BobT]

Surface Tension is correct. I believe in our co-op, PCA costs also have something to do with purchased power. For example, at times of peak demand our co-op buys electricity from North Dakota and it's at a premium price. They know we need it and they have it. PCA I believe factors in that added cost.

The base fee you're talking about I believe would be like a monthly utility fee that for the hookup. I suppose it covers things like line maintenance, overhead, etc.

Bob

[nolte]

I'll see if I can explain this a little bit more.

The PCA charge is a mechanism for Cooperatives to cover their volatile power costs. For Coops to change their base rates, they have to do a study, develop rates, and then get them approved by the board of directors of the cooperative. It's not a quick procedure. For this reason, Coops generally change their base rates every 2-5+ years and use that PCA to fill in the gaps until they change rates again.

10-15 years ago a PCA wasn't needed because Power Costs were very low and stable.

Just a couple other things to keep in mind. Higher Power Costs in Rural areas are a result of lower customer density. It costs nearly $25K per mile of overhead line for residential customers and another $800-$1,000 for a transformer. This doesn't take into account any sort of maintanence on the line. It's a lot easier to recoup those costs from a bunch of customers than a few. Cooperatives do not operate their business to turn a profit while investor owned utitilities do (like Xcel). That is the reason you don't see investor owned utilities in rural areas, because it's not very cost effective.

In WI and MN, the highest power costs should come in the summer then the winter and lastly the spring/fall. Roughly 65% (if not more) of your electric bill is going directly to pay wholesale power cost. Also, it's not so much the price of coal that is going up, but the transportation to get it to the generating facilities. Another driving factor is the higher costs associated with thoe peak capacity needs. If they've got to go on the open market to buy energy it's nearly always at a much higher rate from natural gas peaking plants that can be turned on much quicker than a base load coal plant. It just costs a lot more. It's darn near impossible to build a new coal or nuclear plant right now. Please don't believe the nonsense that our current energy needs can be displaced by wind, solar, hydor or other renewables. It's just not feasible.

I'm curious who your power company in the city is because nearly all of them have some sort power cost recovery. It might not be readily apparent, but I bet it's in there.

[yaggie]

Our electricity is cheep. Just wait a few years. With no new coal plants allowed and present coal plants facing probable carbon taxes it will double in the next five years. Wind power is great but very expensive. This winter I have watched the demand blow right through the expected peak which causes the utillity to buy the expensive peak power from natural gas plants which is very expensive. Thank goodness natural gas prices were cheap.

[LMITOUT]

nolte pretty much summed it all up.

I'm curious that you say that all the customers pay the same PCA? Typically the cost adjustment is a $/kwh multiplied by your usage, just like your regular bill. A flat PCA seems odd as some would pay more than others should and vice versa.

For instance, if you used 2000 kwh and the utility charges $0.10 per kwh, your bill is $200. Over the month you used that electricity the price of power was more than the utility had factored so they have to charge an additional PCA to make up for the difference. In this example it would be another $0.05/kwh ($100).

If your PCA is 1/2 of your regular bill it sounds like the utility is in need of a rate adjustment. In the end it all works out the same as your regular bill will increase and the PCA will decrease (as long as their average purchased power costs remain relatively unchanged over the past few months or year leading up to the rate change). Your provider in the city may have different mechanisms in place to compensate for the higher costs, such as better power contract for one or other ways to hedge against the real-time market prices such as their own generation or some other means of getting cheaper power when the prices are high.

A reason for these extra costs could be that your utility just purchased a new power contract that cost more than the previous contract that may have just expired, but they haven't adjusted the rates yet to cover that difference. Another factor is the cost of natural gas. The market predominately uses natural gas fired "peaker" generation units to make up for the times of the day when demand is high to cover the needed power that the coal, hydro, or nuclear plants can't generate because they're already tapped out. If the price of natural gas is high the price of this power is obviously higher, plus there are congestion costs and other ancillary fees to get the power to your utility which run higher during peak times as the power lines and transformers become further loaded. The price of natural gas has really fallen off over the past few months so accordingly the real-time market prices have come off quite a bit as well.

Short story longer, the utility will typically have a contract to cover a percentage of their energy needs, say 80%, and buy the rest off the market at market prices which fluctuate every five minutes and depend on the system demand of the region for the most part. These market prices are where the PCA costs typically originate as they are out of the utilities control.

[titelines]

Thank you everyone - Once again the knowledge on this site amazes me. Even more amazing is the fact that I understand this now. Funny that I have to have my questions answered on a fishing site when the actual company only confused me more

Just a few points, and to answer some questions.

• Our road is gravel and is approx. 2.5 miles long. The electric is buried cable and runs along the culvert. There are approx. 12 transformers along the road.

• There are only 4 residents along the road presently, so there are not many users.

• LMITOUT: Just to clarify, the PCA charge is a flat kwh charge for every customer, not the same flat fee for everyone. So it really is based on usage as it is multiplied by what you use.

• I don't know if I can name the Co-op directly. They are headquartered in Two Harbors if that's any hint.

• We do get a letter saying that we're eligible for a dividend each year, but the Board decides when that is distributed, and how (direct check to us, or a credit on our bill etc.)

It's gotta be the spike in usage during the Winter months and the fact that it is so much more expensive for them to provide the electricity to us. Our Spring and Summer bills average about $45.00, while Dec - March they are over $400.00, even though we're at the cabin the same amount of time.

At least we're getting towards warmer weather. Thanks again everyone!!

[delcecchi]

Your bills should show monthly kilowatt hours usage. Electric heat maybe? You can compare usage. Our company in Rochester even puts a little bar graph on the bill.

[hunter101]

the information provided is right on, but there are also hidden costs, such as delinqint billings etc... being its a coop and youre a member you could find out these costs with alot of digging.

[nolte]

titelines,

I believe that dividend is usually rotated on a number of years. So when your year is up you'll get something back. It just depends on the Coop, but I think most times it's around 20 years.

I'd also have to concur with the electric heat possibility because the actual electric charge is probably higher in the summer months. Thus more usage in winter, higher bill.

Is that $40 and $400 a monthly amount because the first one seems low and the other high.

[titelines]

Thanks again for all the info.

Nolte - Yep, that's reality. Our whole place is electric, including heat. It's a cabin, so we're only there 8-10 days each month. We have in-foundation heat, which would account for the increased usage during the Winter months (The boiler is running all week to maintain the set temp when we're not there.) When we're there, we have the wood stove going, so the boiler is not running. In Summer, we're really only using electricity when we're there (no air conditioning, no boiler).

Our bills are between $40-$50 from May through August, then steadily climb each month. Our last two bills were $455.00 and $421.00. I expect the next one to be about 20% lower, and so on.

I wish we were there more to keep the wood stove going. That would make a big difference.