What Is In An Electric Bill

There are two components that make up a residential electric utility bill. The Base Rate, which accounts for approximately 68% of the bill, covers all expenses the utility incurs in providing service, such as operation and maintenance expenses, depreciation, taxes and return on capital. The Base Rate is determined by the Public Service Commission in a 42T case filed by the utility. The remaining portion of the bill, approximately 32%, is the Expanded Net Energy Cost (ENEC) and includes expenses the utility must pay to purchase power or the fuel to generate electricity and certain specified environmental compliance and construction costs related to generation and transmission. The ENEC rate is determined in an annual review and true-up process by the Commission.

  • Base Rate or 42T Case
  • Makes up approximately two thirds of a typical residential electric utility bill.
  • Represents the cost of installing, operating and maintaining the utility’s system to deliver electricity to its customers.
  • Includes all operation and maintenance costs including initial investment in facilities, equipment, structures and property; necessary working capital to provide utility service; and improvements and repairs on lines, plants, vehicles and other facilities. It also includes all federal, state and local taxes; depreciation expenses; return on investment for the company; staff salaries, benefits and pensions; rents; fees and interest payments on debt.
  • Through these cases, the Commission establishes a fair and reasonable set of rates to meet the utility’s current cost of service and revenue requirements.
  • ENEC Case
  • Makes up less than half of a typical residential natural gas utility bill.
  • Makes up approximately one third of a typical residential electric utility bill.
  • ENEC proceedings are annual rate adjustments based on a true-up of actual costs for the previous year and an estimate of the next year costs.
  • Includes the cost to the company of purchasing power and transmission service, the fuel to generate electricity and certain specified environmental compliance and construction costs related to generation and transmission. Payments the utility receives from other utilities for power or transmission are offsets to the utility costs.