I was recently asked about what drives electricity prices. We talked about how the daily cost of living seems to have increased across the board.
Just as inflation has affected everything from the price of gasoline to the price of eggs, costs for the fuels required to produce electricity have also risen. This is a timely topic, so I want to explain some of the factors affecting electricity prices—and energy bills—in this month’s issue of Florida Currents.
While there is no short answer, a few key elements affect electricity prices and rates. Some of these factors can be managed by Gulf Coast Electric Cooperative. Some of them can be managed by you—our member-owners. Others are beyond our control.
Your monthly electric bill has three primary parts: a facilities charge, a kilowatt-hour charge and a wholesale power cost adjustment. Let’s unpack one piece at a time to understand your total energy costs and what affects your bill.
The fixed monthly facilities charge covers the costs associated with providing electricity to your home. This includes equipment, materials, labor and operating costs necessary to serve each meter in GCEC’s service territory, regardless of the amount of energy used. We must maintain the local system, including power lines, substations and other necessary equipment, to ensure the reliable service you expect and deserve. Like many other businesses, we’ve experienced supply chain issues and steep cost increases for some of our basic equipment. Because we are a not-for-profit cooperative, some of these expenses must be passed on to our members. I should note the facilities charge is the same for everyone, and the costs are shared equally across the membership.
The kWh charge covers how much energy you consume. You’ve likely noticed the amount of energy you use varies monthly and is typically affected by extreme temperatures. When temperatures soar or dip, your cooling and heating equipment run longer, which increases your home energy use. Regardless, energy consumption is an area you have some control over, and you can lower your monthly bill by actively reducing energy use. Your thermostat is a great place to start, so keep it close to 78º during summer. As a reminder, Gulf Coast Electric Cooperative offers free energy audits. Call (850) 265-3631, ext. 3004.
The wholesale power cost adjustment is the same amount for all co-op members. It covers fuel cost fluctuations without having to restructure electricity rates continually.
I hope this information sheds light on some factors affecting electricity prices. While we can’t control the weather or the rising costs of fuels, please know GCEC is doing everything possible to keep internal costs down.