Blog Archive

Monday, January 25, 2010

Your Electric Bill and the Customer Charge

With the cost of electric power higher than it used to be, combined with the cold weather causing most of us to use a lot more of that expensive power, some folks are scrutinizing their bill a lot more than ever before. That must be the case because we have gotten a lot more questions lately about one item which appears on all electric bills issued by us – the Customer Charge.

On your residential electric bill, this charge is presently $10 per month. If you have a small commercial account the Customer Charge is $15 per month and if you have a bit larger commercial account it is $45. Bigger businesses have correspondingly larger monthly Customer Charges.

Most folks want to know why this charge appears on the bill at all, and hopefully, this blog post will answer that question. The short answer is that the Customer Charge is designed to pay the expense associated with the fixed cost of delivering electric power to a home or business. The energy charge portion of the bill (expressed in kWH and/or kW demand) is designed to pay for the actual energy we purchased for you from TVA.

The fixed costs associated with delivering electric power to you each month include a long list of things that have nothing to do with the actual volume of electric power you purchase each month. Those things include: cost of the meter, service conductors, transformer, and other plant that serves your home or business; the cost of reading the meter, producing, and mailing the bill; the cost of owning the trucks, tools, equipment and paying the personnel necessary to maintain your electric service; the cost of tree trimming and storm damage repairs associated with maintaining service to your home or business; and the cost of tax equivalent payments to local schools and governments.

After considering that list of things that cost money but are not associated with the number of kilowatt-hours you use each month, it becomes pretty clear that the Customer Charge is actually much smaller than it really should be. For many years, by popular demand of the customers, kWH charges have actually been kept a bit higher than they really ought to be because customers just did not like the idea of paying a larger fixed charge, and that has always confused all of us in the electric power business. An appropriate Customer Charge protects the average electric consumer from subsidizing the unusual customer that maintains an electric service at a location that uses a very small amount of energy. If there were no Customer Charge at all and if the EPB collected all of the revenue necessary to maintain the network through kWH charges, then those who just wanted a service maintained for their convenience though little energy is consumed, would get that service virtually for free, paid for by all of the normal customers. It amazes me that anyone would favor such an unfair system.

We are all accustomed to paying our car payments for the right to have a car, whether we use it or not, and paying for our gasoline depending on how many miles we drive. The same philosophy should be customary for electric power. The Customer Charge is equivalent to the car payment and the kWH charge is equivalent to buying gasoline for the car. Hopefully, this will help everyone to understand why there are the two charges on the monthly bills from EPB.
Friday, January 15, 2010

MTV vs. EPB and Other Small Cable Systems - A Truce is Declared

At the last possible moment, the MTV folks and our representatives, the National Cable Cooperative, reached a tentative agreement which will mean that the MTV suite of channels will not be interrupted today. We are very happy to get this news and we are extremely proud of the support we got from the majority of our customers for our decision to “get tough” and stick with the cooperative as they carried out these negotiations.

This means that the present danger of losing these channels has ended but it does not mean that the battle is totally over. We still need to see what kind of deal the cooperative agreed to and decide locally if we are willing to pay what they agreed to (although it is quite likely that we will, even though we assume the deal will call for us to pay more for these channels). That information should be arriving at our door step within the next week or two.

Again, thanks so much for your willingness to hang in there with us as we went eyeball to eyeball with a giant. This will make our future negotiations with programmers big and small much easier for us to accomplish. You guys rock!
Friday, January 8, 2010

Roll Over or Get Tough - Part 2

A couple of weeks ago we talked about this issue as it relates to our agreements with some broadcast stations and as it related to the controversy between Fox and Time-Warner Cable. The broadcast station issue will not be an emergency until the end of 2011. The Time-Warner/Fox matter really only affected us as an observer and as a harbinger of things to come for us in the future. However, now we find ourselves directly and immediately affected by a breakdown in negotiations with MTV Networks.

Because of our small size in a market dominated by behemoths, we belong to a cooperative that purchases much of cable programming on behalf of hundreds of small cable systems like ours. That cooperative has done wonderful work in getting us lower prices and attractive terms for our cable programming, but now they find themselves in a "Roll Over or Get Tough" battle of their own. This battle is not looming over the horizon. It is upon us today.

The battle is over the programming we purchase from MTV Networks. On our system, these channels come from MTV Networks:

Comedy Central
MTV Hits
MTV Tr3s
Nick Jr (Noggin)
Nickelodeon Toons
TeenNick (The N)
VH1 Classic
VH1 Soul
Spike TV
TV Land
CMT Pure Country

This is not an insignificant list and some of these channels might be your very favorites. So, we face the question again. We can stick with the cooperative and hope they can finalize a deal which is acceptable. Presently the negotiations are not going well and MTV is threatening to turn off those channels to our system on January 15 if the cooperative does not capitulate to their demands for increased fees. In the alternative, MTV has offered to sell us the programming directly, at much higher fees than we presently pay, if we break away from the cooperative and sign a direct deal with them by January 12. Of course, they are trying to break the back of the cooperative by convincing the members to move to direct deals like this.

So, we ask our customers once again. Do we roll over or get tough? The clock is ticking.