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 want to help explain some of the factors that impact electricity prices.
While there is no short answer, there are a few key elements that affect power costs and rates. Some of these factors Broad River Electric can manage; some of them members can control.
These are the primary parts of the monthly electric bills most residential members receive—a grid access fee, an energy charge and the wholesale power adjustment (WPA). To understand your total energy costs and what impacts your bill, lets unpack one piece at a time.
The grid access fee is a fixed, monthly charge to cover the costs associated with providing electricity to your home. This includes power lines, equipment, labor, substations and other operating costs necessary to serve each meter in our service territory, regardless of the amount of energy used.
Like many other businesses, we’ve experienced supply chain issues and steep cost increases for some of our basic equipment. For single-meter residential accounts, the grid access fee is the same for everyone and the costs are shared equally across the membership. Under our current rate structure, however, this fee does not cover the full share of these expenses. That means the rest of those costs must be captured with the energy charge.
The energy charge is the fee for the amount of energy you used during the billing cycle, measured in kilowatt- hours (kWh) by your meter. A kilowatt is a unit of measurement for electricity. One kilowatt is the amount of power required to light a 1000-watt lightbulb, so the energy used to keep a 1000-watt lightbulb lit continuously for one hour equals one kilowatt hour.
You’ve likely noticed the number in the “kWh Usage” box on your bill can vary from month to month, and it’s typically higher during the hottest and coldest months of the year. That’s because your indoor heating and cooling systems run longer when it’s very hot or cold outside, which leads to spikes in your energy consumption.
Energy consumption is an area in which you have the most control. You can lower your monthly bill by actively reducing energy use, and your thermostat is a great place to start.
Wholesale Power Adjustment (WPA) rate increases or decreases by fractions of a cent because of fluctuations in the prices we pay to our wholesale power provider and other suppliers. The WPA helps cover those fuel and other cost fluctuations without having to continually restructure electricity rates. The adjuster rate is multiplied by your energy use and added to, or subtracted from, the total charge. Sometimes it increases your energy rate, sometimes WPA lowers it.
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 costs of fuels, please know Broad River Electric is doing everything possible to keep internal costs down.
We’re here to help you, too. Contact us at (866) 687-2667 if you have questions about your energy bill or for advice on how to save energy at home.