Cooperative Living July 2016 - 25
YourBusiness | by Scott Gates, Contributing Writer
The Lowdown on Fixed Costs and
Your Cooperative Electric Bill
You co-op incurs both fixed costs and variable costs in delivering electricity to your home or business.
closer look at your monthly
electric bill will show a fixed
access charge regardless of how
much - or how little - electricity
you use.
Your co-op incurs both fixed costs and
variable costs in delivering electricity to
your home or business. You can compare
this to the dual costs involved in owning
and operating a car. The fixed cost of the
car is the same whether you drive it
2,000 miles a month or 200 miles. The
main variable cost of gasoline, the energy it
takes to drive the car, can vary depending
on the cost per gallon of gas and how
much you drive in a given month.
A co-op's fixed costs include not
only the utility plant (poles, wires,
transformers, meters, substations and
warehouse), but also the cost to maintain
co-op rights-of-way and administrative
expenses. This fixed cost, or access charge,
is meant to cover the cost over time of
these fixed costs. That's like your
car payment.
The variable portion of your bill is
impacted by both how much electricity
you use and the cost of energy used to
generate that power, which may fluctuate
based on demand and availability.
Traditionally, many electric utilities
covered only a small portion of the fixed
costs in what they often call a customer
charge. The variable energy charge part of
the bill, the kWh rate, often included
payment for a significant amount of the
co-op's fixed costs.
This creates a lack of transparency for
the true cost. It would be like if you paid
part of the car loan off at the gas pump
with each gallon of gas you buy.
Many electric cooperatives have
transitioned to a more transparent rate
formula where costs are unbundled in a
way that more accurately represents the
different cost components of delivering
electricity. It's just one way co-ops
strive to remain accountable to their
member-owners.
www.co-opliving.com
The main
variable cost of
gasoline, the energy it takes
to drive the car, can vary
depending on the cost per
gallon of gas and how
much you drive in a
given month.
Scott Gates is editor of the North Carolina statewide electric-cooperative publication, Carolina Country,
and has written on technology, energy efficiency and a variety of topics for the National Rural Electric
Cooperative Association, the Arlington, Virginia-based service arm of the nation's 900-plus consumerowned,
not-for-profit electric cooperatives.
July 2016 | Cooperative Living | 23
A
The fixed
cost of the car is
the same whether you
drive it 2,000 miles
a month or
200 miles.
http://www.co-opliving.com
Cooperative Living July 2016
Table of Contents for the Digital Edition of Cooperative Living July 2016
Cooperative Living July 2016 - 1
Cooperative Living July 2016 - 2
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