Electric Service and Energy Costs

Electric Service Cost

There are two parts to the Electric Service Cost. The first is a meter or customer charge. The meter charge is determined by the customer service type and the service phase type. The second part is related to the amount of kilowatt usage. A set rate is multiplied by the kilowatt hours used. The rate is set by ordinance and is determined by the customer service type and whether City or Rural.

Example:
Your billing indicates 1,000 usage for electricity. Your Electric Service Cost is 1,000 multiplied by the current rate plus a $17.75 meter charge for a City Residential-Single Phase customer. i.e.-if current rate $.06, the total Electric Service Cost would be $77.75. The Electric Service Cost is set at a level high enough to fully recover our cost of operating and maintaining the electric utility. Operating cost includes salaries, line material/supplies, motor fuel cost, capital outlay and debt service payments.

Energy Cost

To recover all costs of purchasing power, as well as the transmission cost for that power, the City of Wellington charges each customer a monthly Energy Cost. This charge also recovers the cost of fuel when the city uses its own generation. This charge varies from month to month as energy and fuel prices fluctuate with seasonal supply and demand.

The calculation of the Energy Cost is based on the previous three months cost or purchased energy divided by the previous three months kilowatt hour consumed and then a factor of 1.15 is applied to compensate for transmission, distribution line losses and interdepartmental usage. . i.e.: the total cost of energy and fuel for January through March divided by the total kilowatt of energy purchased and generated for January through March multiplied by 1.15. This is what is called a “Three Month Rolling Average”. The three month rolling average is used to protect our customers from spikes in cost through the higher demand months of June through September. The desired result is a more constant charge through the year.

Example:
The previous three months kilowatt hour consumed: 23,686,995 kWh. The previous three months cost of purchased energy and fuel: $1,301,155. $1,301,155 divided by 23,686,995 = $.05493 multiplied by 1.15 = $.06317

If a customer has a usage of 1,000 kilowatt his/her Energy Cost would be 1,000 multiplied by $.06317 resulting in an Energy Cost of $63.17