Understanding your Electric Bills: What are this charges for? (Part 1)

Good day everyone! 

I want to share with you how to better understand your electric bills by explaining and citing examples about the different charges incorporated in our electric bills. For the discussion, I will be using our VECO electric bill.  So, to start our discussion, let us first identify the different parts and information contained in our electric bill, as shown. 

As bill payer, we are more concerned about the total charges we are paying rather than the basic information’s in our electric bills. So, for me, the important/ key information aside from the collection and account numbers, are your total kW-Hr usage, the total amount billed and the due date for payment. Did you ask yourself what are this charges for? Why the bill differs everyone even with the same kW-Hr consumed? Why utilities announce increase in per kW-hr due to generation cost? If you have asked to yourself, either one of the question, I do hope this answer help you.   

Generation Charge

 Generation charge basically is the average cost of producing a 1 kW-Hr of electricity as per delivered to each consumer. The price of electricity in the Wholesale Electricity Spot Market (WESM) varies hourly and depends on the number of player (generating /power plants) available in the market. 

For example, electricity prices at rush/peak hours (6:00 to 9:00 PM) is much higher as compared to the price during 2:00 AM. This is because during peak hours’ diesel-based powered plant are running since renewable and fossil-fuel based plants cannot provide the full kW that the consumers are using.  So, the price of the generation charge is the average of this prices over a month. Other factors to be considered are maintenance and shutdown of Generation/ Power Plant, that is why during maintenance period generation charges rises.  

Transmission Charge

 It is the cost of transmitting 1 kW-Hr of electricity over the national grid. Before we expound that one, an electrical grid is the interconnection of all generation (power plants), transmission (NGCP), utilities (VECO, MERALCO, MECO) and consumers (us) of electricity. So, what is transmission charge?

For example, here in Cebu, Philippines, the primary provider of our electricity is either Leyte Geothermal Power Plants or the Toledo-Naga Coal Power Plants. The transmission charge is the cost of sending electricity from the Toledo City to Mandaue City (where I lived). 

Analogy: If we take an analog, it is the same as the fee of sending your Steem Dollar (SBD) to Coins.ph wallet (my bitcoin wallet). The transmission charge covers the maintenance cost of transmission lines (shown in the picture above).  

System Loss

It is the additional fee charge to consumer for the loss kW in the transmission of electricity. For example, the Generating Plants supplies 100 kW of electricity to the National Grid. However, the grid only receives 99 kW. So, there is 1 kW electricity loss due to transmission. The loss of electricity is due to, but not limited to, the resistance and heating of the transmission line So, the loss 1 kW of electricity will be charge to the consumer proportionally.  

Thank your for reading the first part of Understanding your Electric Bill! Stay you in I will upload soon the nest part. Once again, Thank you and have a great day!

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@juecoree

(image sources: 1 2 3 )