Topic 3: Cost Categories Explained
Different cost categories (charges) may apply to your account, depending on your level of service.
Facility Charge (previously Service Charge) – This flat monthly charge represents the fixed costs of making electricity available to your meter. The amount of the charge will vary only with the size of the transformer serving your residence, business, or facility. It does not change with the amount of electricity you use. These costs cover the meter, customer accounting, and a portion of the poles, wires, and line transformer serving you.
Energy Charge –This is the cost of the electricity that we buy from our energy supplier. You pay a certain amount per kWh depending on your rate class. For smaller accounts, the capacity charges are rolled into the energy charges and are not separate on the bill.
Capacity (or Demand) Charge –This charge applies to facilities that require a large amount of electricity during a short amount of time, even if it is only for an hour. This requires bigger wires to get the energy to your meter, bigger poles to carry the bigger wires, and transformers and breakers large enough to handle the load. Capacity charges can be as high as the energy (kWh) charges on a wholesale power bill.
How is demand determined?
An electrical utility regularly monitors the amount of current flowing through each of its circuits. Periodically, we estimate what that maximum current flow might be in future years. If the estimated flow exceeds the capacity of the wires and equipment to safely handle that level of current, the circuit must be upgraded. Customers are expected to pay for those upgrades to the extent that they are responsible for the increased flow of current. Such capacity charges are part of your electric bill.