Factors that influence elec icity prices

It’s become increasingly obvious that the daily cost of living has gone up across the board. Just as inflation has affected everything from the price of gasoline to the price of eggs, costs for the fuels required to produce electricity and transmitting that electricity to our local area have also risen. This is a timely topic, so I wanted to help explain some of the factors that impact electricity prices (and energy bills) in this month’s issue of Ohio Cooperative Living.

A few key elements play a role in electricity prices and rates. Some of these factors Pioneer can manage, some of them you can affect, and other factors are beyond our control. So, let me break it down.

There are three primary parts to your monthly electric bill: an availability charge, local distribution cost, and generation & transmission (G&T) cost. To understand your total energy costs and the factors influencing your bill, let’s look at one charge at a time.

The first is a fixed monthly availability charge, which covers the costs associated with providing electricity to your home. This includes equipment, materials, labor, and operating costs necessary to serve each meter in Pioneer’s 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 businesses, we’ve experienced supply chain issues and steep cost increases for some of our most-used and basic equipment. Because we are a not-for-profit cooperative, some of these expenses must be passed on to our members. The availability charge is the same for everyone in each rate class and the costs are shared equally across the membership.

Another component of your monthly bill is the local distribution charge, which covers how much energy you consume. You’ve likely noticed the amount of energy you use varies from month to month, with changes corresponding primarily to the weather. When temperatures soar or dip, your cooling and heating equipment runs longer, increasing your home energy use. Energy consumption is an area that you have control over, and you can lower your monthly bill by actively reducing energy use. Your thermostat is a great place to start.

In spite of increases in Pioneer’s costs for items affecting the availability charge and distribution charge, Pioneer has not increased the rates for these components of electric bills since 2016. However, we are evaluating the potential for an increase in rates in this area later this year.

Ron Salyer PRESIDENT & CEO

The last component of your bill is the G&T cost, which is the same amount for all co-op members in each rate class. The G&T cost has been increasing slowly because of higher fuel and transmission prices, which means the power that Pioneer purchases from our wholesale provider is more expensive. The G&T cost covers fuel cost fluctuations without having to continually restructure electricity rates. Throughout the past five years, this cost has increased about 2.5% per year, on average. Each component plays an important role in your electric service reliability and keeping your electric cooperative running smoothly and effectively.

I hope this information sheds light on some of the factors that determine electricity prices. While we can’t control the weather, the rising costs of transmission and fuels, or the cost of everyday living, please know that Pioneer continues do what we can to keep costs down while providing the reliable service you have come to depend on.