I was recently asked by one of our newer employees about what impacts electricity prices. We discussed how the cost of living has increased for everyone.

Just as inflation has affected the price of gasoline, eggs, and many other items, the cost of the fuels required to produce electricity has also risen. In this month's issue of the Pee Dee Hi-Lite, I want to explain some of the factors that influence electricity prices and energy bills.

While there is no simple answer, there are a few key elements that affect electricity prices and rates. Pee Dee Electric can manage some of these factors, some can be influenced by you, and others are beyond our control.

While there is no simple answer, there are a few key elements that affect electricity prices and rates. Pee Dee Electric can manage some of these factors, some can be influenced by you, and others are beyond our control.

Your monthly electric bill consists of four primary components: a facilities charge, fuel factor, energy consumption/kWh charge, and other charges and services. Let’s take a closer look at each component individually to understand your total energy costs and how they affect your bill. I’ve broken it down in the box below.

I hope this information provides insight into some of the factors that impact electricity prices. While we cannot control the weather or the rising costs of fuels, please be assured that Pee Dee Electric is doing everything possible to control costs.

Service Costs

The first component is a fixed monthly facilities charge, which covers the basic costs associated with providing electricity to your home. This includes equipment, materials, labor, and operating costs necessary to serve each meter in Pee Dee Electric's service territory, whether a member uses 0 kWhs or 2,000 kWhs. To ensure the reliable service you expect and deserve, we must maintain the local electric distribution system, including power lines, substations, and other necessary equipment. Like many other businesses, we have experienced supply chain issues and significant cost increases for some of our basic equipment. For instance, the cost of a 25 KVA distribution transformer increased from $888.89 in 2021 to $1,534.70 this year. Additionally, the wait times to receive this essential equipment are up to 36 weeks or longer, depending on size. As a not-for-profit cooperative, some of these expenses need to be shared among our members. It's important to note that the facilities charge is paid by everyone.

Fuel Cost

Another component of your monthly bill is the fuel factor. When fuel costs rise, Pee Dee Electric's price to purchase power from our wholesale provider becomes more expensive and results in a fuel factor charge. When fuel costs are less than budgeted, the cost of wholesale power is less expensive and results in a fuel factor credit. Therefore, the fuel factor covers cost fluctuations without the need for constant electricity rate adjustments.

Energy Consumption

The charge for electricity, or kWh charge, reflects how much electricity you use in a billing month. You may have noticed that the amount of energy you use can vary monthly, usually due to extreme temperatures. When temperatures soar or dip (depending on the season), your cooling and heating equipment run longer, increasing energy usage at home. However, energy consumption is an area where you have some control, and actively reducing energy use can help lower your monthly bill. A great place to start is by setting your thermostat as close to 78 degrees as your comfort allows during the summer months.

Mandated Charges

Lastly, there are other mandated charges, such as taxes and the NC Renewable Energy Charge. The NC Renewable Energy charge represents Pee Dee Electric's associated costs in meeting Senate Bill 3, the North Carolina Renewable Energy Portfolio Standard (REPS) requirements. This law, passed by the North Carolina General Assembly in 2007, aims to expand renewable energy development and efficiency throughout the state. The charge covers the cost of participating in renewable energy projects with other North Carolina cooperatives. Another common charge is for security lights installed at your home or business by Pee Dee Electric. This flat monthly charge covers the cost of the light, electricity used by the light, and any maintenance costs associated with the light.