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Consumer Information |
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When demand for electricity falls and sales decline, shouldn’t my rates also go down?
Not necessarily. Utility rates are tied to the cost of providing utility service – the cost of building and maintaining power plants and transmission lines, for example. The cost to build and maintain these assets, unlike the fuel used to power them, are there regardless of how much electricity is used during a given year. These are called fixed costs. Customers can, however, reduce their utility bills by using less. Using less means customers don’t pay the costs, like fuel, that vary with usage and they pay a smaller proportion of the fixed costs than do customers that don’t conserve. A customer’s utility bill can and will decrease by using less, even though the utility rates increase.
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