What the heck is a kWh?, continued.

United States money is in dollars and cents. But electric bills use decimal fractions of a cent.

When you see a gasoline price, it might be 2.789 . That is two dollars, 7 dimes (tens of cents) and 8 cents. But what is that little nine? It is nine mils, each mil is a tenth of a cent. On a gasoline price, it is there to fool people, the real price is rounded to the nearest cent, and is really $2.79.

But, electricity prices might be $0.067550 for one kWh (kilowatt hour). That is 6 cents, 7 mills, 5 hundredths of a cent and 5 thousandths of a cent. The price is worked out before the Public Utilities Commission (PUC) of each state. The utility, such as Xcel Energy, requests a rate and the PUC either accepts it or suggests a lower rate. Eventually, a decision is made.

In Minnesota, the summer rate (about 6 cents and 8 mils) is higher than the winter rate (about 5 cents and 8 mils). The reason: supply and demand. In Minnesota, winter demand is only 3/4 of summer demand.

If you multiply summer use by summer rate and winter use by winter rate and round each to the nearest cent, you get $11.46 and $20.69; add these to get $32.15 .

Even if I used no electricity at all, Xcel would need to keep up the wires and equipment to supply me. They charge me $6 per month as my share of this upkeep; it is called "Basic Service Charge."

I used 526 kWh during the month. They charge me $0.020798 (about 2 cents and 1 mil) extra for this, calling it a "Fuel Cost Charge." Presumably, Xcel negotiated this charge with the PUC to cover increases in the cost of fuel. It adds $10.94 to my bill.

On the same 526 kWh, they charge $0.0021 for an "Environment Improvement Rider." My bill does not explain this charge, which is about 2 mils per kWh. It adds $1.11 to my bill. If I find out more about it, I will post an explanation to this blog.

Finally, there is a "Resource Adjustment" of $1.11 . Believe it or not, this is a charge to cover telling me to conserve energy by using fluorescent lamps, etc. The Legislature requires Xcel to tell me this, Xcel does so, then charges me for telling me. Every year, the Legislature approves this procedure.

The sum of all this is $51.30. The state of Minnesota then charges 6% sales tax and when the tax is added, that is my total bill. There are seven (7) separate charges on my bill.