Your monthly electric bill is based on the number of kilowatt hours of electricity that you use. But, it’s important to understand that your rate is based on several cost factors.
Fuel Costs
Currently, about one-third of each dollar you spend on electricity pays for the coal, uranium or natural gas we must purchase to fuel our power plants. These fuel costs are passed directly to you with no markup – we charge you the same amount that we pay for these fuels. This portion of your rate is adjusted annually, up or down, based on our actual costs.
Base Rates
This is the part of your rate that covers the costs involved with building, maintaining and operating the system that allows us to deliver electricity to your home (power plants, wires, poles, transformers, service trucks, safety equipment, employee salaries*, property taxes, etc.). This is also the portion of rates from which we are given the opportunity to earn the fair and reasonable return that investors expect.
*There is a common misperception that executive salaries are a large component of our rate structure. However, executive compensation is just a small fraction of our rate structure. In fact, completely eliminating the salaries of all of our corporate officers would only reduce customer rates by less than 3/10 of 1 percent – about a penny a day for a customer using 1,000-kWh a month.
