Base and Usage Rates? What Are the Differences?
While the front of your PUD bill has a bullseye with the total amount owed each month, look on the back you’ll see a detailed breakdown showing how you are charged for each PUD utility service received:
The usage charge could be zero, or tens of thousands of dollars depending on how much of a service is consumed in a month. In theory, the usage rate recovers the cost of the service the PUD sells. Usage rates are calculated by multiplying the number of kilowatt hours (or gallons) used per month by the price for the service used. As shown above on a current residential electric bill, for usage less than 600 kWh per month, the cost is 8.8 cents. Usage beyond 600 kWh is billed at 10.7 cents.
This is the flat, fixed fee customers pay each month for service received, regardless of how much is use. In theory, base fees are intended to cover the utility’s fixed costs as well, including infrastructure, overhead, and general administration, and debt service. The PUD’s current monthly base fee for residential electric service is $18.50 as shown above.
Why the Detailed Explanation?
The PUD is in the process of adopting new water, electric, and sewer rates for the next four years. Part of the discussion has been over where to apply future increases. Is it more fair, or easier on customers to apply increases to base fees or usage rates? Should pricing be used as a signal to inspire customers to adopt behaviors that save energy and reduce total demand? All of these factors are weighed by the PUD commission as they studied rates over the past year and work to formulate new rates for the years to come.