Just as inflation has impacted everything from the price of gasoline to the price of eggs, costs for the fuels required to produce electricity have also risen. This is a timely topic, so I wanted to help explain some of the factors that impact electricity prices (and energy bills).
While there is no short answer, there are a few key elements that impact electricity prices and rates. Some of these factors Oakdale Electric Cooperative (OEC) can manage, some of them you can impact, and other factors are beyond our control.
There are three primary parts to your monthly electric bill: a facility charge, an energy charge, and a Power Cost Adjustment (PCA). To understand your total energy costs and what impacts your bill, lets unpack one piece at a time.
The first is a fixed monthly facility charge, which covers the costs associated with providing electricity to your home. This includes equipment, materials, labor, and operating costs necessary to serve each meter in OEC’s service territory, regardless of the amount of energy used. In order to ensure the reliable service you expect and deserve, we must maintain the local system, including power lines, substations, and other necessary equipment. Like many other businesses, we’ve experienced supply-chain issues and steep cost increases for some of our basic equipment.
For example, the cost for an underground distribution transformer (which looks like a large green metal box) went from $1,605 in 2021 to $2,217 this year, and wait times to receive this essential equipment are up to 12 months. Because we are a not-for-profit cooperative, some of these expenses must be passed on to our members. I should note that the facility charge is the same for everyone and the costs are shared equally across the membership.
Another component of your monthly bill is the energy charge, which covers how much energy you consume. You’ve likely noticed the amount of energy you use can vary from month to month and is typically impacted by extreme temperatures. When temperatures soar or dip, your cooling and heating equipment run longer, which increases your home energy use. Regardless, energy consumption is an area that you have some control over, and you can lower your monthly bill by actively reducing energy use. Your thermostat is a great place to start, so be sure to keep it close to 78 degrees during summer months or while you’re away from home.
The last component of your bill is the PCA, which is the same amount for all co-op members. The PCA covers fuel cost fluctuations from our wholesale power provider, Dairyland Power Cooperative, without having to continually restructure electricity rates.
I hope this information sheds light on some of the factors that impact electricity prices. While we can’t control the weather or the rising cost of fuels, please know OEC is doing everything possible to keep internal costs down. Our cost of service/rate study is almost complete. Look for more information in next month’s magazine on any future rate increases.