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What does your power bill pay for?

By TY BEAVER H&N Staff Writer February 21, 2009

How is your money spent when you send a check to Pacific Power every month?

The bills show a variety of charges, taxes and fees. Some go directly to the company and the cost of its operation. Others go to the city of Klamath Falls if you live within city limits. And a portion of your monthly payment goes toward state-mandated energy conservation projects.

State lawmakers are considering adding a line item of about $1.50 to that monthly tally to help pay for removal of four hydroelectric dams on the Klamath River.

The dams belong to Pacific Power’s parent company, Portland-based PacifiCorp, and their removal is a key element to implementation of a water agreement that settles long-standing issues in the Klamath River Basin.

It’s not uncommon for customers and organizations to protest an increase in a utility’s monthly charges, but some say sometimes paying more now is better in the long term.

“Sometimes it’s necessary for companies to raise rates to make investments,” said Bob Jenks, executive director of the ratepayer advocate Citizens’ Utility Board.

Cost of power

The Oregon Public Utilities Commission lists the true cost of power as the largest portion of an average electric bill in the state. About 49 percent of the money you pay each month goes toward generating power or buying it from other companies and providing it to customers.

PacifiCorp spokesman Tom Gauntt said the remaining portion of the bill goes toward other costs of providing power, such as replacing worn-out equipment, installing and maintaining transmission lines and facilities, repaying investors and paying for administration and customer service.

Taxes and fees

More than 10 percent of your monthly bill goes to state and local taxes and fees.. Oregon has two charges on monthly bills that go to the Energy Trust of Oregon to fund energy conservation projects.

The city of Klamath Falls charges the utility rent for the space its transmission lines and electric poles occupy, a cost that is passed on to consumers as a tax. Many cities levy a similar charge, and it represents a substantial portion of their annual revenue, Gauntt said.

Not everyone likes all the charges utilities require consumers to pay, and Jenks of the Citizens’ Utility Board, or CUB, works with the Oregon PUC to monitor new charges.

Jenks said his organization has been successful at halting utilities from putting inappropriate expenses on the backs of customers. One example was natural gas provider Avista trying to put the expense of buying 4-H pigs in Washington on the bills of its Oregon customers.

But increased costs are justified at times. When a utility wants to make wind power part of its energy portfolio, there’s an initial high cost that consumers must pay for. But wind power doesn’t require a fuel source, such as coal or natural gas, balancing that initial high cost over the long run.

The same could end up being the case with a proposed surcharge to remove the four dams. Jenks said his organization doesn’t know whether removal is the best course, but CUB is supporting the state legislation because it would require a prudence review to ensure that removal is better for consumers than refurbishing the dams for fish passage and making other improvements.
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Breaking down a power bill

Herald and News February 21, 2009 - Source PacifiCorp

It’s not entirely accurate to break down all the charges on a monthly bill and how that factors into the cost of power, but each charge can be explained.

Basic charge:

This is a flat rate of $7.50 per month that all Pacific Power customers pay, even if a customer uses no power. It’s a way of maintaining the physical infrastructure that ensures power is always available.

Delivery charge:

This variable rate factors into the cost of distributing the power through transmission lines and maintaining equipment.

Supply Service Energy charge:

This variable rate is part of the cost of either producing power or acquiring it from another company.

Oregon tax charge:

This is a state tax that is based upon the amount of power used per month.

Public Purpose charge:

One of two charges that goes to the Energy Trust of Oregon. The trust is used for energy conservation and renewable energy projects.

Energy Conservation charge:

The second of two charges for the Energy Trust of Oregon.

Low-Income Assistance Charge:

A flat rate of 50 cents per month goes toward helping low-income customers pay their electric bills.

BPA Columbia River Benefits:

Oregonians receive a credit based on a variable rate from the Bonneville Power Administration for the use of the Columbia River to produce hydroelectric power.

Klamath Falls City Utility Tax:

The city charges Pacific Power rent for the space the company’s electric poles and transmission lines occupy. That cost is passed onto consumers.

Blue Sky Energy:

This is an optional charge consumers can sign up for to help pay for renewable energy projects in rural Oregon.

— Source: PacifiCorp