CEMC billing charges explained by Jim Coode, general manager

Seventeen months ago, your Cumberland Electric Membership Corporation board of directors and management began listing “customer charge,” “energy charge,” and “TVA Fuel Cost Adjustment” separately on our bills. The reasoning behind this was twofold: to be transparent and to have the opportunity to explain what the different components of electrical service are.

Customer charge

Regardless of sales, many activities take place every month to assure proper voltage and capacity is present at each member’s meter terminals. Right-of-way maintenance, pole testing, metering, billing, and many other administrative costs are incurred throughout the five-county CEMC system. The purpose of the customer charge is to recover these costs. If a member uses a minimal amount of energy, compared to the CEMC investment for necessary capacity, sales would not begin to cover the expense of providing service.

Energy charge

Energy charge is the amount in dollars per kilowatt-hour CEMC bills for energy consumption. It is registered on the meter and varies greatly with weather. For the CEMC system, winter is the peak sales period, followed by summer.  The fall and spring seasons render significantly lower electrical energy consumption.

The customer charge and energy charge are not arbitrarily selected amounts. A cost of service study by TVA and also a consultant group indicates where costs are incurred within each rate classification. By adhering to the results of the cost of service studies, we prevent subsidization of rate classes.  In other words, each class supports itself. In addition to being the wholesale power provider to CEMC, TVA also serves as our regulator. Any rate action requested must be approved by TVA prior to implementation.

Fuel Cost Adjustment

The TVA Fuel Cost Adjustment is a charge by TVA to CEMC for fuels such as coal, uranium and natural gas used to generate electricity. This cost varies monthly and is passed on from TVA to the consumer; in our case CEMC members. The FCA was at its highest point in October 2008. We will display the FCA in the same format TVA utilizes. This representation accounts for all TVA fuel related costs.

Distribution of electrical service is a complex industry. At CEMC we are determined to provide this service for our membership reliably and at a reasonable cost, while assuring public safety and the safety of employees who work on these energized power lines.