From time to time, we get questions about the Facility Charge on each monthly bill. Other organizations may refer to it as a Customer Charge or a Connection Charge. They all describe the same thing – a way to recover some of the fixed costs of an operation regardless of the usage.
People are sometimes unsure about having to pay for something that they don’t think they are “using”. Especially if it is a service they only used at certain times of the year, such as a cabin, stockwell or bin service. But that is the situation that makes a Facility Charge necessary: to recover the costs of having power available to an account 365 days per year regardless of how much or when it is used. We are constantly doing maintenance on existing lines, replacing damaged poles, and rebuilding stretches of line that are aging. That and many other kinds of maintenance are required to continue to provide reliable and high-quality electric service to all our member accounts.
Another example I have often cited is that we don’t send out a separate bill for outage calls. If you have a fuse out on one of your accounts or if a storm breaks off a pole, our guys get out there and get the lights back on. Those are examples of things that have to be done whether the service is being used right then or not. So, they are costs that need to be recovered through a Facility Charge.
And it is not just electric utilities that now use this type of cost recovery. Almost every service you have now employs this model. For many years you have gotten a cable or satellite bill regardless of how much TV you watched that month. Cell phones used to be more usage-based but now are often a fixed access charge. And any subscription or streaming service you have is just a flat fee per month.
Even though it might not always seem that way, a Facility Charge is actually the fairest way to recover fixed costs. It ensures that everyone is contributing their share to having power available when they need it. It helps ensure that accounts using more electricity are not covering costs for the ones that use less. And it helps make sure Midwest is recovering our costs in low-usage times while not over-collecting in high-usage periods.
Jayson Bishop
*Midwest Electric is an equal opportunity provider and employer.*