Electricity is something many of us don’t think about until the lights go out or the bill arrives. But behind every switch, there’s a complex system working to deliver reliable power and a detailed cost associated with it.
As a member-owned cooperative, Pioneer Electric operates at cost—we don’t generate profits for investors. Instead, every dollar you pay goes toward providing service and maintaining the system that powers your home or business.
This is the first article in a series I’m calling Behind the Meter: Understanding the Cost of Your Electric Service, to help members understand what’s behind the numbers on your monthly bill.
Where does the money go?
Purchasing wholesale power makes up the largest share of our costs—a little over half of every dollar we spend. The rest is divided among the equipment, people and resources needed to deliver electricity to homes and businesses. Understanding this breakdown is the first step in understanding how your rates are set—and why every part of your bill matters.
Purchased power cost is the largest portion of our expenses. It’s what we pay to buy electricity from our wholesale power provider (PowerSouth). The cost of power is affected by fuel markets, demand and generation costs.
Depreciation and amortization are accounting methods that spread the cost of long-term assets over their useful life. For example, instead of charging the full cost of a new bucket truck in the year it was purchased, we recover a portion of that cost each year over its lifespan.
Operations and maintenance includes the day-to-day upkeep and construction of our system—everything from repairing lines after storms to trimming trees, maintaining right-of-way and building new lines.
Administrative costs are the behind-the-scenes expenses that help keep the co-op running: billing, member service, accounting, computer systems and general office operations.
Taxes and interest: Even as a not-for-profit, Pioneer Electric still pays property taxes, fees and interest on loans.
All Other Expenses covers training, safety programs, and other necessary costs that don’t fall into the categories above.
Why it matters
Rising costs—especially for wholesale power—have tightened the gap between what we spend and what we bring in. Like you, we’re feeling the effects of inflation and market volatility.
We are currently conducting a cost-of-service study to provide a detailed, data-driven examination of the costs associated with delivering power to our members. This includes analyzing every part of our operations—from power supply and equipment to staffing and long-term system maintenance. The goal is to analyze how costs are distributed across our system and to determine the most effective way to recover those costs from each member class. This study helps ensure that rates are equitable, transparent and reflective of actual service costs.
It’s important for members to not only understand Pioneer Electric’s overall costs but also to understand how your power bill is calculated. Over the next few months, I’ll discuss the charges you see on your electric bill to help you make more informed decisions about your energy usage.
I appreciate your trust as our team serves you with a commitment to keeping your power dependable and affordable.