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If I am using less energy, how come utility rates are not coming down?
Utilities are among the most capital-intensive sectors, with many of their costs stemming directly from investments in
and maintenance of the power plants, transmission and distribution lines, equipment, and structures that are used to deliver
electricity and natural gas. In addition, with increased environmental standards and requirements to generate a larger
percentage of their power from renewable sources, utilities are also making additional investments in environmental controls
and renewable energy projects like wind farms. These fixed infrastructure and operating and maintenance costs are
reflected in and must be covered in utility Most of the revenue utilities receive is used to pay operating and maintenance costs. Purchased power and fuel are the largest operating expenses for a utility; taxes are the next largest expense. The cost of salaries, materials, supplies, services, and a variety of other expenses also must be met. In addition, a utility must be compensated for the cost of depreciation, amortization, and the cost of capital, which includes the return paid to debt and equity investors for the use of their money. While electric and natural gas sales are down, largely due to the current economic situation, and many customers are using less energy, the resulting utility savings on fuel costs are not enough to cover utility fixed, infrastructure, operating and maintenance costs, and ongoing investments. Utilities continue to face steadily increasing costs to generate and deliver electric and natural gas service to homes, businesses, and industries.
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rates.