Bills and Rates

Running the rate race

In a recent member survey that we conducted, public power utilities identified rate management as their number one concern.

And for good reason. Many customers only think of their utility — briefly — when they get their monthly bill. Most of them are not interested in the mechanics behind a utility’s rates and likely never will be. They simply want to keep their bills low.

But on the flip side, there is a growing portion of public power retail customers who care about where their electricity is coming from and are interested in contributing to sustainability — especially if they can save money by doing so.

In recent years, public power has worked to serve the needs of its customers based on what I call “the three-legged stool”: affordability, reliability, and environmental stewardship. You are working hard to keep your rates low, and as shown in the state rate comparison map, public power customers continue to pay less, on average, than customers of investor-owned utilities. But are you letting your customers know how they benefit from public power? How often do you emphasize the community-owned advantage?

The changing world around us requires public power utilities to change from being passive monopoly energy sellers to being trusted energy advisors. We want our customers to understand how rates are set and what it costs to get electricity to their homes, offices, restaurants, and streets. And we have to do this in a way that makes sense and makes the impacts of customer decisions clear to them.

Being energy advisors means we also need to be educators — of our customers, our boards or city councils, our media, and our policymakers. As public power providers, our rate making process is out in the open for our communities to dissect, but how can we engage customers so that they understand and appreciate all we do behind the scenes to make sure they have reliable, affordable, and environmentally responsible electric service?

In public power, we know that rates aren’t just about covering our costs — they are about being responsive to our community’s needs and treating all classes of customers fairly. They might be about investing in renewables or establishing programs to assist low-income customers. They might be about helping customers meet their energy goals, whether through offering rebates or other creative programs that change customer behaviors in a way that helps the utility and all its customers.

As technologies and customer preferences and lifestyles evolve, we have more opportunities — and more challenges — in being effective energy educators.

As distributed generation grows rapidly, utilities like yours are developing rate designs that are fair to all customers (see our rate design graphic). State legislators and other policymakers are increasingly learning about utility rates, and how these rate design options affect different types of customers. In 2017, 24 states introduced, discussed, or enacted policies related to net metering (see map). Some of this legislation incentivizes net metering, and some does not. At the federal level, we at the Association continue to advocate to keep decision-making about rate design at the state and local level. This is not an area where a “one size fits all” federal standard will work well.

We are ready to help you become educators. We invite you to read reports we’ve released in the past few months about distributed generation and rate design and the economics of energy storage. Our team stays busy to bring you the latest policy developments affecting rates and to find examples of how other public power utilities are meeting their own rate design challenges. We provide a forum for utility employees who specialize in rates to learn from each other on our listservs, at our Business and Financial Conference, and at the Accounting and Finance Spring Meeting. We welcome all utility employees to learn more about rates through our certificate programs, webinars, and trainings. We have templates and social media materials you can customize and share with your customers to help explain different aspects of rates. And if none of those items fits your needs, our in-house experts are ready to discuss your rate management concerns – email or call us anytime. It is important that we as public power utilities make the best possible rate design decisions for our communities.

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