My name is mMorgan Holmes, and I am a researcher
with the Energy Policy Innovation Council or EPIC, at Arizona State University. We provide
unbiased research, and information to policymakers and the community on energy policy best practices
with a special focus on Arizona and clean energy innovation. Today I’m going to talk
about what your energy bill pays for. When we get our energy bills, like most other bills
the actual payment amount is broken into a number of individual fees that combine to
make up our monthly payment amount. I’m focusing here on the energy bills sent out by the larger
utility companies in Arizona, including APS, Tucson Electric Power or TEP, and the Salt
River Project or SRP. On the bills that come from many of these major electricity providers
the individual fees listed on the bill fall into a few major categories. The actual name
of the fee may be slightly different depending on the provider and some providers will combine
certain charges into a single fee. But in general, the fee categories include
-delivery generation, which can include power supply adjustments and transmission costs
-taxes and assessments -green charges
-logistical service, including metering and billing
-and other, including low income assistance, system benefits, and a Department of Transportation
Safety surcharge. First we’ll talk about the delivery charge.
The delivery charge is a charge based on kilowatt hour usage and/or kilowatt hour demand to
build and operate the equipment for delivering electricity to the home or business. This
includes transmission lines, poles, transformers, and substations. APS calls this the delivery
service charge, and SRP includes the delivery charge in its energy charge.
Next we’ll talk about the service charge. The service charge generally covers the cost
of keeping service available, whether or not it’s used. The costs of billing and collections,
and the costs of maintaining and reading the meter. APS breaks the service charge into
several individual fees for the costs above, while SRP includes these costs in a monthly
service charge. Next we’ll talk about generation charges.
The generation charge typically covers the cost of producing or purchasing the electricity
during both peak and non-peak hours. APS and SRP break this into separate charges for the
generation of electricity on peak and off-peak. TEP appears to cover this cost in their general
usage charge. Next we”ll talk about taxes. In Arizona,
the electricity bill will generally contain state, county and city sales taxes. APS and
TEP break out the taxes individually, while SRP combines the taxes into just two charges.
TEP also breaks out a city public utility tax and a city franchise fee. APS also breaks
out the franchise fee which it notes is a charge by a municipality for APS’s use of
the public rights-of-way for its facilities. Next we’ll talk about assessments. Assessments
are generally fees charged to support the operation of the Arizona Corporation Commission,
or the ACC, and the Residential Utility Consumer Office or RUCO. The ACC is the state commission
responsible for regulating Arizona utilities and setting reasonable utilities rates. RUCO
is an entity that was established by the state legislature in 1983 to represent residential
ratepayers before the ACC in rate related proceedings involving public service corporations.
TEP also breaks out an assessment for the Arizona Independent Scheduling Administrator,
or AZISA. This assessment is required by the ACC and helps to fund AZISA which oversees
the application of operating protocols to ensure statewide consistency for transmission
access. APS combines both the ACC and the RUCO assessments into one fee, and TEP breaks
out each assessment individually. Next we’ll talk about green charges. In some
cases, the energy bill will also contain charges to help cover the costs of local energy efficiency
programs or the costs of meeting federal environmental standards.
Next we’ll talk about logistical service charges. A portion of the electric bill typically goes
toward covering logistical costs, like the cost of servicing your meter and the cost
of sending you your bill if those costs have not already been included elsewhere in your
fees. Finally, most bills will include a variety
of additional charges to cover specific programs, like assistance for low income consumers,
customer education, and the Department of Transportation Safety Surcharge.
This is just a brief overview of some of the charges including in your energy bills, but
you can typically find additional information on your specific bills by going to the individual
utility websites. Thank you for watching!