Since they’ve been much in the news lately, why don’t you run and grab your utility bills? Let’s go through them together. Go ahead — we’ll stay right here.
While we wait, we have time for a quick joke. Never open your water and electric bills simultaneously, because you could get shocked. It all depends on how you conduct yourself.
OK, welcome back. You have your bills in hand now? Good. Look for the detailed part of your bill. We want to focus on the first line. If it’s a bill from Eugene Water & Electric Board, it’s called “Cost of Basic Service” and it’s listed separately for electricity and for water. (If you missed the joke, you didn’t miss much.) Lane Electric calls this first line “Basic Charge.” Northwest Natural goes with “Monthly Service Charge.”
This top line never changes. Utility companies could better label this line, “Cost of Having Service At All.” You must pay this amount each month, even if you never use an ounce of water, a watt of electricity, or a therm of natural gas — though I confess I don’t know what a therm is. This top-line charge covers the utility’s cost of keeping its lights on, even if none of its customers did the same.
It would be as if a restaurant charged each patron a set fee at the door to cover the establishment’s fixed monthly costs, and then charged only for ingredients and prep time for each menu item.
The next line on your bill reflects how much you used, sometimes accompanied by a separate line for delivering what you used. Looking at my own bill, if my power company included a carry-out option, I could save 30 percent. But how would I get my energy home? Maybe a large thermos would do the trick.
Below all that, you may find miscellaneous other charges that the utility company has no control over. They are sometimes required to collect fees for the city or the state — because government needs money to keep its lights on, even if nobody else does.
You didn’t think your bill would be this complicated, but we’re just getting started.
In 2001, EWEB decided it needed to give its customers a direct incentive to conserve power, so they instituted a tiered pricing structure. The first batch used by each household each month came at a lower cost. Second and third batches tiered the cost upward.
Now EWEB wants to eliminate the tiers altogether for residential customers. The reason for the change, they explain, is that power is suddenly much less expensive and more plentiful. The utility has so much excess power that they can only sell their excess supply at a loss.
What any of that has to do with its customers is not completely clear. They claim that the “streamlined” billing, without rates tiered by consumption, will not increase total revenue for the utility company. So why make the change?
EWEB officials maintain that the current pricing model is unfair to customers who use more electricity, because they have to pay more than low-power customers, even though EWEB isn’t incurring extra cost. That argument holds water only if the top line “Cost of Basic Service” is eliminated.
So that’s what EWEB should do, and other utility companies should follow, as they are able. Charge a sustainable unit rate, but eliminate the fixed top-line charge. Nothing would be more fair and more transparent than charging each customer only for the power or water or gas that’s being used.
No one disputes that conservation should be encouraged. Pricing structures shape public behavior. Habits are harder to change than rates.
As things stand, the champions of conservation pay nearly double the per-unit rate as those who use their full allotment of EWEB’s first-tier power. Once the fixed top-line cost is added in, 800 kilowatts costs a little more than a dime per kilowatt. A household that uses only 200 kilowatts per month pays almost double that rate.
If power companies want to energize the public’s conservation efforts, they should change how they do things currently.
Don Kahle (firstname.lastname@example.org) writes a column each Friday for The Register-Guard and blogs at www.dksez.com.