Have you ever looked at your electric bill and been confused about what all those separate charges are for? It sure is complicated! So go get your recent electric bill, pour yourself a cuppa and let’s go through it…
First of all, what are they selling us? Energy – the thing that makes changes happen and makes stuff go! The speed with which energy is delivered (or used up) is measured in kilowatts, and the total amount of energy used up is measured in kilowatt-hours. So, one kWh is equivalent to powering a one kilowatt appliance for one hour. But the way that kilowatt-hour is billed to us is where the complications begin.
There are fewer than 50 households in Andover served by Eversource; everybody else including the Town buildings are with the New Hampshire Electric Co-op (NHEC). So this explanation will use the Co-op bill as an example.
When all per-kWh charges on the electric bill are summed (including Co-op Power, Regional Access Charge, Systems Benefit Charge, & Delivery Charge) the effective Co-op rate today is $0.214/kWh. Although the media have reported in the past year that there have been significant rate hikes and discounts by the other three NH regulated utilities (Eversource, Unitil and Liberty Utilities), the Co-op is generally cheaper than they are and is not regulated by the NH Public Utilities Commision (PUC).
NHEC’s charter was part of the 1939 Rural Electrification Act. It’s called a “co-op” because we, its customer-members, are all the shareholder-owners of this utility, which is operated as a non-profit whose sole mission is to negotiate the lowest cost for its members. In contrast, the other three NH electric utilities are for-profit companies who pay their shareholder-investors out of their profits and charge their customer-ratepayers for any losses as “stranded costs”. If you think this risk-reward arrangement sounds unfair, I would agree with you. Moreover, a customer generally has no choice about which utility company owns the only wires to their house; the company has a monopoly over them. This is why the PUC was created – to control the prices the for-profit utilities are allowed to charge customers for energy.
If you want to know what we in Andover are paying for per kWh besides “Co-op Power” (which is the price of the actual “juice”, $0.138/kWh) here is as succinct an answer as one will find:
1) Regional Access Charge is each NH customer’s share of the statewide cost to build and maintain the Northeast’s whole high-voltage towers & wiring system, plus to conduct a continual electricity auction. (Imagine national & international energy trading 24/7, at ten minute intervals!) This big system serves all six NE states and is operated by the “Independent System Operator for New England” in Holyoke, MA. It’s quite expensive, but necessary because our system continues to depend upon distant large power plants more than local generators. ($0.0278/kWh)
2) System Benefit Charge is the amount the customer pays for “beneficial electrification” projects such as efficiency projects, NHSaves, grid modernization, etc. – not very expensive. ($0.0070/kWh)
3) Delivery Charge is the customer’s share of the cost to build & maintain local Co-op “poles & wires” equipment, including the emergency crews on standby. This can be unpredictably very expensive, depending on extreme weather, etc. ($0.0403/kWh)
When you add the Co-op Power, Regional Access Charge, System Benefit Charge and the Delivery Charge together, you get the total price for electricity, which is $0.214 per kilowatt-hour.
How solar helps
Many folks have decided to generate their own electricity, and the most popular way to do that is with solar that can back-feed the grid. In the early days of grid-tied home power, what was generated merely spun the meter backwards, subtracting kWh so the customer only paid for “net” use at the end of the month. Today, the law says “net-metering” means that the utility is only required to buy back solar electricity at 75% of the retail sale price. This is fair, because the utilities need to be paid for the use of the poles and wires that supply the customer-generator’s home at night, and accept the electricity generated by day, even if the net at the end of the month is zero. To manage this, the Co-op installed “smart meters” that can figure out which way electricity is flowing and report it to the utility every few minutes.
Each 1000kWh of “clean” solar power put onto the grid has additional value, as it earns one “Renewable Energy Certificate” (REC) which can be sold to a polluting generating plant to lower its average annual emissions per kWh. NHEC has been paying members about $40 per REC over the past several years, computed and credited annually at the end of March. Then the Co-op resells all its RECs to dirty generators at a higher price, lowering everyone’s Co-op bill. (This doesn’t really make sense, but it’s the law.)
IN AN SIDEBAR BOX:
Here‘s a round-figure example to perhaps make it easier to understand, based on a hypothetical 1000kWh of electricity used by a Town building without a solar generator:
Suppose the Town’s bill was $214. Only $138 of that actually purchased electricity. About $28 paid ISO-NE, $40 paid to maintain local poles & wires, and $7 was spent to improve efficiency for our homes and businesses. (I’m ignoring the flat $33/mo service charge every customer pays for the privilege of receiving a bill from the accounting department.) Cost of 1000kWh: $214
With a solar installation of sufficient size, when the Town buys $214 of electricity off the grid, then eventually generates and sells the same amount back at 75%, the Town only pays a net $54. (This is a worst-case day/night value. It’s probably going to cost less than that, depending how much solar power is used in real-time during daylight “behind the meter”.) Eventually, the Co-op writes Andover a check for that 1000kWh REC worth $40. Final cost for this example’s 1000kWh is $14, saving the Town $200 compared to the previous example.
In reality, the Town Office Building uses and generates twenty times this example’s electricity in a calendar year (actually 21kWh last year) so total savings are at least $4000. Savings could improve further, with shifting more of TOB’s electricity use from nighttime to daylight hours, or installing more solar on other Town properties.