NIX THE FIX! Say NO to higher monthly fixed charges!
There’s a disturbing trend developing in Indiana. As a result of slow electric load growth due to many factors (including economic downturns, increased energy efficiency, and decreased costs of distributed generation, most notably rooftop solar), Indiana’s electric utilities are seeking to increase fixed monthly charges on customers’ bills.
Put another way, the utilities want to charge you more before you use one single kWh of electricity. Utilities prefer to collect costs in fixed charges because it reduces their risk that lower sales will adversely impact their revenues and profits.
The Problem with Higher Fixed Charges
Other businesses with fixed costs – the oil industry, hotels, and grocery stores for example – do not impose mandatory fees to cover their fixed costs. Instead, these costs are reflected in the product price, and consumers can control how much they spend by how much they purchase. The same should be true for electric consumers.
Fixed costs are unfair. They hit low electricity users harder than high electricity users. Bills will increase by a much higher percentage for customers living in small apartments and homes than for those living in spacious homes.
Fixed costs are inequitable. Low income customers bear a disproportionate burden. Fixed fee increases consume a larger share of the incomes of those who are the least able to pay, most notably vulnerable populations on fixed incomes like seniors and people with disabilities.
Fixed costs are anticompetitive. Higher fixed charges reduce the economic return from saving energy and generating your own electricity at home with solar panels or other types of distributed energy technology. The utility steals a portion of your bill savings to pad its profits.
Higher fixed costs also cause you to lose much of your ability to control your electric bill. When you have to pay more each month regardless of how much electricity you use, you have less control over your family’s energy costs. The illustrative example below from the excellent “Caught in a Fix” report by Consumers Union and Synapse Energy Economics displays the inequity of higher fixed charges. The full report can be found at http://consumersunion.org/news/new-report-from-consumers-union-exposes-problems-with-fixed-charges-on-electricity-bills/.
For more information, read our latest fact sheet here.