Understanding your bill
One thing that people routinely want to know is how
their power bill is made up. People want to know what they are
paying for. I wanted to break this down for you by looking at the
average dollar paid for a residential power bill. We will format
this column like this:
For every dollar you pay on your power bill …
27cents goes to the energy charge on Santee Electric
Cooperative's power bill.
For anyone who did not know, SEC buys power on a wholesale level
and has built our system to distribute that to all of you. Our
power bill has two main components. Energy, measured in
kilowatt-hours (kWh) is one of those components.
34cents goes to the demand charge on SEC's power bill.
That's the second part of the wholesale power bill that SEC pays
each month. This is the part that is most difficult to understand
because (1) residential consumers do not pay a demand charge and
(2) the demand charge looks at a specific hour of each month - but
it's not the same hour each month. This is how our wholesale power
provider holds us accountable for the burden we placed on the
generation and transmission systems when the peak occurs. This
typically happens between 6 a.m. and 9 a.m. on a cold winter
morning and between 3 p.m. and 6 p.m. on hot summer afternoons. The
summary of this portion is that electricity does not cost the same
thing 24 hours a day. There are certain times of the day when it
costs considerably more.
23cents goes to the fixed cost of running your
This is the cost that SEC would have to pay to run this company
even if we sold no energy at all this month.
16cents goes to funding the demand burden placed on SEC's
Just like our wholesale power bill has a demand charge to cover
the investment in generation and transmission, we must also pay for
the distribution system. The distribution system is everything from
our substation to the meter on your house. Unlike the fixed cost
(the line above), this one is directly related to the burden your
service places on the distribution system when it is peaking. As
you might expect, the distribution system also peaks during the
windows that I mentioned in the wholesale demand section above.
If I could try to summarize this in three sentences, this would
be it. Of your power bill, 61% goes to paying SEC's power bill, and
39% is SEC's portion. It's also important to notice that 50% goes
to demand charges - which shows that the cost of power is not flat
at all. Finally, and most importantly, you will notice that 0% goes
to profit - and it always will.
Robert G. Ardis III
President and Chief Executive Officer