Last month we discussed that Piedmont Electric was in the process of conducting a cost of service study. This study helps us determine if the rates we charge are suﬃcient to cover our costs and that our charges are properly aligned with what is causing these costs.
This month, we answer some of the most common questions your local co-op gets about rates.
What makes up our rates?
The ﬁrst item on your bill is labeled “Energy charge” and is made up of more than just how many kWh you used during the last billing period. It is a combination of both variable and ﬁxed charges.
The variable component of this Energy charge is based on how many kWh you use. It is a variable cost because this number goes up and down as you use diﬀerent amounts of electricity each month. The energy we purchase from Duke Energy is the largest cost that is recovered in this manner.
Since it is a variable cost to Piedmont, we recover it in a variable way. The amount on your bill is the amount of kWh you use multiplied by the electric rate. That is why your bill will typically be higher after months of high use caused by seasonal temperatures.
The “Power cost adjustment” line item on your bill is also based on your energy use. For the last few years the power cost adjustment has been a credit to you because we have been able to provide you with power at a lower cost than was expected despite the additional costs, like coal ash clean-up costs, that have been passed along to us by Duke Energy.
Other line items on a residential member bill include an “Energy rider,” an “Eﬃciency rider,” a “Storm cost recovery rider,” state taxes and, for those members who participate, a contribution to the Piedmont Electric Helping Hands Foundation. The Energy rider and Eﬃciency rider recover the costs to comply with the North Carolina Renewable Energy Portfolio Standard, and the Storm cost recovery rider recovers the extra cost of restoring power after the prior year’s extreme storms.
If I completely turn oﬀ my power, why do I still receive a bill?
This is the ﬁxed component of the energy charge on your monthly bill and it helps cover the expenses that do not change based on how much electricity you use. For example, when we build a power line from the road to your home, we incur a cost regardless of how much energy you use each month. Other examples of ﬁxed costs include transformers, meters, taxes, right-of-way maintenance and more. This ﬁxed cost is designed to incentivize energy eﬃciency and is not an incentive to sell more energy.
What expense has the biggest impact on Piedmont Electric’s rates?
Piedmont Electric’s biggest expense is the electricity we supply to our members that we purchase from Duke Energy. Your co-op is charged for the total amount of electricity we need and the amount we need at a given time which is also known as demand. This is because the cost to produce power varies minute by minute.
Your co-op is charged more when demand is high such as winter mornings or summer afternoons. Members who conserve or shift their energy use away from these times help reduce the cost of supplying power.