What factors impact electricity prices? It’s a critically important question, especially since the daily cost of living continues to rise.
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 explain some of the factors that impact electricity prices—and energy bills— in this month’s issue of South Carolina Living.
While there is no short answer, there are a few key elements that affect power costs and rates. Some of these factors Lynches River Electric Cooperative can manage; some members can influence. There are three primary parts to your monthly electric bill: a service/facilities charge, an energy consumption/ kilowatt-hour charge and a wholesale power cost adjustment (PCA). To understand your total energy costs and what impacts on your bill, let’s unpack those one at a time.
The fixed, monthly service/facilities charge helps cover the costs associated with providing electricity to your home. This includes the equipment, materials, labor and operating costs necessary to serve each meter in our 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 single-meter residential accounts, the service is the same for everyone and the costs are shared equally across the membership.
The energy consumption or kilowatt-hour charge covers how much energy you use. 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, your cooling 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 reducing energy use. Your thermostat is a great place to start. The higher you have it set during the summer months, the less energy you’ll consume.
The last component of your bill, the wholesale power cost adjustment or PCA, is the same amount for all co-op members. The PCA/WPA increases or decreases by fractions of a cent because of the fluctuation of fuel prices, which means the power that Lynches River Electric Cooperative purchases from our wholesale provider. The PCA covers fuel cost fluctuations 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 costs of fuels, please know Lynches River Electric Cooperative is doing everything possible to keep internal costs down.
We’re here to help you, too. Contact us at (843) 672-1111, if you have questions about your energy bill or for advice on how to save energy at home.
Chief Financial Officer