Jeannette M. Mills, VP, Customer Operations & Chief Customer Officer
Do we charge customers for their electric supply for periods where their power was out? When you lose power following a storm, you do not incur an electric supply charge on your bill for the period you were without power. The electric supply portion of your bill — which reflects the cost of the electricity commodity itself — makes up the majority of a customer’s bill. During an outage, you are not billed for electric supply you do not use.
Are customers who experienced power outages charged for electric delivery service?
The electric delivery service charge, the lesser of the two main types of charges on the bill, covers the costs associated with delivering power to customers over the long term. It goes to operating and maintaining the poles, wires and substations and other equipment that connects homes and businesses to the power supply. Even when service is temporarily interrupted for customers, the system still has fixed costs associated with it. All customers, including those with outages, later share in paying the costs of the distribution system during the first 24 hours of a major storm.
An example of a similar situation occurred during the week after the storm while many county waste management employees were out doing storm cleanup and some weekly trash and recycling pickups did not occur. County residents whose pickups were missed won’t be refunded the portion of the property taxes they paid that cover trash and recycling pickups for that week. County trash costs did not go down because they did not get to some customers. The county still had to pay for the fixed costs of the trucks, the costs of the landfill and for the labor of the trash collectors.
Have we changed the way we apply the delivery service charge following power outages?
Yes, in previous years customers without power for multiple days continued to pay for delivery for every day until their power was restored. Last year after Hurricane Irene, the Maryland Public Service Commission adjusted the process to ensure that the delivery charge is only applied for the first 24 hours after a major storm is declared. For customers without power after the first 24 hours, the delivery charge is not applied for the remaining period until power is restored. The Commission’s order was an attempt to strike a balance between the very real, ongoing costs of operating a power distribution system with ensuring customers aren’t unnecessarily burdened financially during long-term power outages.
Why are utility bills structured in this way?
In the past, higher customer energy usage equated to higher revenues. In order to provide an incentive for utilities to encourage customers to use energy more efficiently, since 2008, utilities receive a fixed amount of revenue per customer, which allows for continued maintenance of the distribution system even though customers may be using less power. There is a constant balancing that occurs to ensure that we collect only the regulated, fixed amount. Months where the temperatures are abnormally hot and customers are using more energy are offset against months where energy usage is lower.
How is the delivery charge used?
The delivery charges are used in large part to reinvest in the physical distribution equipment and systems that deliver power to customers. The delivery charge is a critical source of funding for maintaining and upgrading infrastructure in order to deliver energy safely and reliably and to minimize, to the extent that we can, the effect of severe impact storms on our system and customers.
How much can a customer who lost power for multiple days as a result of the recent derecho expect to pay for delivery charges for the first 24 hours during the outage?The 24-hour period after the derecho storm is part of the full month’s delivery charges, amounting to less than 50 cents of an average customer’s bill. This charge will be filed with the Public Service Commission in August and will be recovered in future rates.
