Many Factors Affect Electricity Prices


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. We wanted to help explain some of the factors that impact electricity prices (and energy bills) to help our members understand their electric bills.

There are a few key elements that affect electricity prices and rates. Some of these factors we can manage, some of them you can help with, and other factors are beyond our control. There are three primary parts to your monthly electric bill: (1) a service charge, (2) an energy consump­tion or kilowatt-hour charge, and (3) a power cost recovery factor. To understand your total energy costs and the impacts on your bill, let’s unpack one piece at a time.

The fixed monthly service charge covers the costs associated with providing electricity to your home. This includes equipment, materials, labor and operating costs necessary to serve each meter, regardless of the amount of energy used. 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 price hikes for some of our basic equipment. Because we’re a not-for-profit cooperative, some of these expenses must be passed on to our members.

Another segment of your bill is the kilowatt-hour charge, which covers how much energy you consume. You’ve likely noticed the amount of energy you use varies from month to month based on the weather. When temperatures soar or dip, your cooling and heating equipment runs longer, which increases your 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.

 The last component of your bill is the PCRF, which is the same amount for all co-op members but fluctuates over time. The PCRF increased in 2022 because of higher fuel prices, which meant the power that the co-op purchases from our wholesale provider was more expensive. The PCRF accounts for fuel cost fluctuations without having to continu­ally restructure electricity rates.

I hope this information helps you understand what you’re looking at when you receive your monthly bill. While we can’t control the weather or fuel cost variability, please know that we are doing everything possible to keep our internal costs as low as possible!