Bills and Rates

Affordability: It’s the bill, not the rates

Public power utilities have a long history of being able to offer low electricity rates to customers.

Over the past decade, as many costs have come down across the industry, we have continually seen the difference between public power, cooperative, and investor-owned utility residential rates shrink. In 2018, for the first time in a long time, we did not have the lowest average bundled rate. Our residential customers’ rates are 11% less than those of residential customers served by IOUs, but cooperative residential customers had rates that were 1% less than ours.

Does this mean we’re no longer able to claim that we’re more affordable? No.

To repeat a longtime industry mantra, “Customers pay bills, not rates.” What ultimately determines the bill is how much electricity our customers use.

Public power customers use about 20% less electricity than co-op customers in a given month. The chart below shows how this extrapolates to continued overall savings for our customers. Extrapolated over an entire year, the average cooperative residential customer pays about $324 more for electricity than the average public power residential customer.

  Investor-Owned Cooperative Public Power
Average rate per kilowatt-hour $0.1347 $0.1181 $0.1195
Average kWh/month 855 1,175 933
Average monthly customer bill* (extrapolated) $115 $139 $112

There are a few reasons why residential customers of public power utilities use less electricity than those of rural electric cooperatives. Public power utilities emphasize energy efficiency more than cooperatives, according to data from the U.S. Energy Information Administration. On the flip side, cooperative customers often have more electrified end uses, in part because they live in more remote areas of the country.

Electric use also varies from region to region. In the South, electricity use tends to be higher because of increased demand for cooling and because more homes use electricity to heat their water and homes.

As more public power utilities promote electrification, this average usage could change, again shifting our relative cost. Overall, public power can continue to help our customers save by guiding them on how they can use energy more efficiently and get the best value from their utility.