Transparency Series: Where do your dollars really go?

Transparency Series: Where do your dollars really go?

May 27, 2018

We know, we know. Energy is confusing and the industry doesn’t do you many favors to uncomplicate things. We think it’s time to put an end to this! You work hard for your money and deserve to know where it’s going instead of paying a vague bill every month.

There are three main sections of your bill: supply, delivery and sales tax. Supply is for the actual electricity that powers your devices. Delivery is the cost of getting that electricity to you and the maintenance of that system. Sales tax is the good ol’ sales tax you see on other goods and services. For now let’s just focus on the delivery portion.

Who has control over your delivery charges?

In New York City, Con Edison owns the grid infrastructure that we use to connect generators to consumers. Everyone who uses the grid to charge your devices or turn on your lights is using Con Edison as their delivery company. In the same way Amazon uses USPS to deliver their packages, all energy companies use Con Edison to delivery electricity to you, the consumer.

Delivery charges are set-in-stone charges and only in rare cases (such as owning solar panels) can you do anything about them. The amount that shows up on your bill is determined tariffs set by Con Edison and overseen by the New York Public Service Commission (NYPSC). Their tariffs are laid out in 589 page documents like this, but we’ll save you the trouble.

How does Drift help?

Although Drift cannot affect your delivery charges, we do simplify the experience. Drift will manage your ConEd account so you’ll only pay one energy bill to Drift. Down the road Drift will be releasing innovative ways to reduce your delivery costs, so stay tuned!

How much of your bill is delivery?

Using an average New York City household of 400 kWh (kilowatt hours – a unit of measurement) per month, we see below that supply is about 1/3 of the total bill, leaving delivery to be about 2/3. The majority of your dollars go towards getting your electricity to you, not for the electricity itself.

This percentage split between delivery and supply costs vary depending on the size of the consumer. For small users, such as those using 100 kWh per month, a larger part of the bill will be fixed due to the Basic Service Charge (a fixed fee; more on this later). This percentage quickly drops as the consumer’s supply cost increases.

Basic service charge: This charge is the administrative charge Con Edison bills to allow you to be a part of the grid (delivery system). A few of the activities that are covered under this charge:

    • Reading your meter once a month
    • Maintaining their customer service center and account management technology
  • Recouping investments in their infrastructure (such as upgrading poles and wires)

This is a fixed fee and does not depend on how large or small your monthly consumption is. The basic service charge can be a very large portion of your bill if you’re a very small consumer, but a very small portion if you use a lot of electricity.

Delivery (per kWh): Your delivery charge is dependent on how much electricity you consume, and goes towards the maintenance of the grid that gets the electrons from point A (a hydro dam) to point B (your house). It’s an extremely complicated system (different blog post for that topic) that includes all types of infrastructure, from poles and wires to substation like this one.

System benefit charge: The system benefit charge encompasses clean energy and energy efficiency activities. The New York State Energy Research and Development Authority (NYSERDA) receives about 3/4 of this charge to run their programs, such as the NY Green Bank. The NY Green Bank invests in clean energy projects with the long-term intention of stimulating private sector money into these same clean energy projects. Check out how your money has been put to work here.

The other part of the system benefit charge goes to Con Edison to fund energy efficiency projects. For example: Did you know that if you can earn $95 or more by installing a WiFi-enabled air conditioner?

Temporary state surcharge: The temporary state surcharge goes to the state to cover charges related to conservation programs.

Gross Receipts Tax (GRT) & other tax surcharges: These are taxes imposed by both New York City and New York State that must be collected by Con Edison and eventually remitted to the city and state agencies. The tax rate is 8.875% of the total bill. So there you have it. Your delivery costs from top to bottom.

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