Electric Utility Charges [Xcel Energy - MN]
Power providers charge us all monthly based on usage, right? So why are there so many line items on the power bill and do you have options? We are in Minnesota within Xcel Energy territory and I quickly wanted to talk through the two primary charges on every electric bill for a residential customer.
The two primary segments of an energy bill/charges appear on a standard residential electric bill are:
1) Base Service or Meter Charges
2) Electric Rate (Energy Delivered or Time based)
Base Service or Meter Charges:
This is usually the first line on the bill, it indicates you have service and an open account with a meter assigned. This covers much of the back-office overhead to manage, maintain, bill, and support the account holder. In Xcel territory this is currently $8.00 as the standard residential service charge.
top - Screenshot from Xcel Residential Rate Card (link at bottom of article).
bottom - Picture of the Basic Service Chg on the monthly bill for Xcel Energy Minnesota Customer.
Electric Rate:
Charging for total energy used (Energy Rate) is the most typical residential billing method. This is the default when signing up for new service, it keeps the bill simple with a cost per unit used. In my case (Xcel Energy Minnesota) - we pay roughly $0.08-0.10 per unit. This varies based on the time of year:
October - May = ~$0.08 / kWh
June-September = ~$0.10 / kWh
For reference the unit is measured in Kilowatt-hours (kWh) delivered.
This standard rate the easiest for the residents as you’re just paying a simple rate throughout the year. This is a bit more complex for the utility as they have to average out all the infrastructure costs, power purchasing/power producing costs, and operational expenses down to the small energy charge of a few cents you see above. This is accomplished with a bunch of very advanced math including infrastructure depreciation, forecasting energy usage, customer base grouth and current costs.
At our house we use on average across the year around 1,100 kWh per month for our family of four and fairly standard house and appliances for Minnesota. In the shoulder seasons and winter we use less when not running the air conditioning unit constantly. Example in April 2020 we used 719 kWh for the month.
top - Screenshot from Xcel Residential Rate Card (Link at bottom of article)
bottom - Picture of Energy rate (winter months) on Xcel Energy Minnesota customer bill.
Similar to the Energy Rate above, charging based on time (Time-of-Use Rate) is assigning two different energy rates to time buckets across a day (primarily weekdays). Below are the electric rates for Xcel Minnesota in 2020, this shows the On Peak or high demand for energy times vs. the Off Peak or low demand for energy times.
9AM - 9PM - On Peak - $0.20-0.16 / kWh
9PM - 9AM - Off Peak - $0.04 / kWh
Time of use rates are typically not used on general residential service, however if selected the bill normally comes out the same or slightly less on average. Time of use is primarily used on secondary service to some larger appliances that you know you’ll use mainly during the evenings.
Example of good time of use rate assets:
-Electric Vehicle Charging
-Electric Water Heating
-Electric Baseboard Heating
Summary:
The two primary charges are simple to understand and track if you start to integrate home automation or other new energy devices into the home.
* Information References - Xcel MN Residential Rate Card