facility charge explained
January 19, 2017

Facility Charge: What is it and what does it pay for?

Facility or fixed charges with electric utilities are necessary for rate equity among ratepayers. For each of the 26,000 metering points in the Eastern Iowa REC service territory, we make a significant investment, and we must maintain that investment to ensure reliability and safety.  We also must have a system of meter reading, billing, and customer service functions in place to take care of customers. This system includes trained people, office facilities, and state-of-the-art technology to provide the level of service expected by Cooperative members.

The cost of all of these facilities and services must be recovered, even if you elect not to buy any electricity during a specific period. The cost of these services are appropriately billed on a per-member-per-month basis rather than in proportion to the amount of electricity purchased.  The Facility Charge on your energy bill pays for a majority of Eastern Iowa REC’s local costs. These costs include everything required to provide electric power to you other than the purchased power costs and demand costs.  This includes the more than 3,700 miles of overhead power line, 77,000 poles that hold the line up, 1,100 miles of underground cable, 50 substations, a fleet of 75 vehicles, plus all the associated hardware required to operate the Cooperative’s distribution system that is spread across all or parts of 12 counties in eastern Iowa.

Following our recent rate adjustment, the Facility Charge increased. The Facility Charge is an average cost to provide the first kWh of service to a member, and it covers the cost of owning, maintaining, and supporting these facilities. These fixed costs do in fact increase every year, and this component of our rate needs to be periodically adjusted.  Previously, a portion of the fixed charges were recovered through a premium charged for the first 250 kWhs used each month. The Cooperative’s board of directors decided, with the new rate structure, to recover these fixed costs through the Facility Charge instead of through the kWh charge.

For members who use a large amount of power each month, the overall change in the total bill will be slight. The change will be more noticeable for members who use smaller amounts of power each month.

facility charge explained