The Components of Your Electric Bill

To give you a better understanding of where the charges come from that are on your electric bill, this article will explain the three main components that make up a residential, farm, seasonal or small commercial electric bill. They are:

• Facility Charge


• Energy Charge


• Power Cost Adjustment

Facility Charge – This charge helps cover the cost of OEC's facilities that are necessary to deliver electricity to your home. Facilities in this case mean poles, conductors, transformers, protective devices and other structures required. It also includes the costs associated with operating OEC. Costs such as sending monthly statements, employee and director expenses, insurance and maintenance are just a few of the overall operating expenses.

All typical residential, farm, seasonal or small commercial services cost about the same amount to keep the power flowing to that service. By charging the same facility charge to all these accounts, everyone is paying an equal share of the operating costs. Large commercial and industrial services require different facilities but they pay a higher facility charge to cover that.

Often a seasonal member will ask why they have to pay the same facility charge as everyone else when they don't use as much power. The answer is that it doesn't matter whether a member uses 100 kwh or 1,000 kwh in a month, the costs for keeping power available to both services are the same.

Energy Charge – This charge is for the amount of kilowatt-hours you purchase. Every time you turn on an electric appliance you are purchasing electricity from OEC. There are different rates per kilowatt-hour for different applications, such the Time-Of-Use rate or the Dual Fuel/Thermal Storage rate.

Beginning with the bill you receive in June 2006, there will be an increase in the rates. There have been many stories in the news that talk about why the price of electricity will increase throughout the world over the next several years. Rising fuel prices, the cost of shipping coal and creating ways to move electricity around the national transmission grid are some of the major factors contributing to increasing electrical costs. As of this writing the new rates are not established yet.

Power Cost Adjustment – With increasing costs in generating and transmitting power, it is not possible to know what the exact charge to OEC will be each month. There is a base rate that we will pay, but then any additional costs will be billed to us as a separate charge called the Power Cost Adjustment. If costs are extremely low one month, the adjustment could be a negative – or credit – on your bill. Because the costs are so volatile we will not be able to tell you from one month to the next what the adjustment will be. What we can tell you is that nothing will be added to this charge. What we are billed for this charge is what will be passed on to you.

It is the intent of Oconto Electric Cooperative to give you a better understanding of your electric bill and what the different components are. If you have questions, please contact OEC to get the answers.