Eye On Modesto

Thoughts and observations about Modesto and Stanislaus County

Residential Customers pay 82% more for Electricity than Industrial Customers

By Emerson Drake

Yes I know it’s a surprise for most people but if you pay more than $100 dollars a month you are paying almost twice what industrial customers pay.

Ok, so you want the specific breakdown? Here it is:

Industrial customers  pay $0.085 per KWH.

Home customers  start paying at $0.1367 KWH for the first 500 KWH (kilowatt hours) which equals the first $68.35 of your electric bill.

From there on they charge you $0.1498 KWH or 82% more than industrial customers pay.

Commercial customers pay $0.121 KWH, so residential is 73% more than commercial.

Literally, everyone else pays less than the average residential user.  Now there are breaks for low income and medical customers but residential users pay for that, too.

MID retail revenues come to approximately $300M.  Of the $300M, Residential pays $133M, Commercial $87M, and Industrial pays $60M.

So while residential users only consume 32% of the total electricity sold they pay for 44%.

Since all of the money MID collects is thrown into the pot to pay their bills, basically residential sales are helping to subsidize all of the rest of MID business.

Now don’t forget the monthly $12.50 ‘user’ fee they charge just to have a line to your home.  And it’s charged even if you don’t buy electricity from them. And there are a lot of residential users 92,160 vs 19,219. We are the people electing the MID Board and yet we are the ones paying the most.

Totals of revenue vs power consumption

Residential:    $132,690,000M         893,956 KWH

Commercial:  $ 87,000,000M          726,854 KWH

Industrial:       $ 66,503,000M          786,935 KWH

Other:             $12,868,000M          120,286 KWH

For this we can thank longtime MID Board members Tom Van Groningen and Paul Warda along with MID General Manager Allen Short. During their time on the Board we went from owing less than $100Million to an astronomical amount of $1.2Billion Dollars.

The term mismanagement just doesn’t fully do justice in describing their actions during this time.

The following is the MID report I pulled the information for this article.

MIDAR2009-FINAL[1]

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7 thoughts on “Residential Customers pay 82% more for Electricity than Industrial Customers

  1. There is definitely something wrong here, who is profiting from this money scheme?

    Does any of these present and past MID Board members own stock in any of these companies which the MID buys power from. America’s main energy company is out of Spain and they dominate the grid in the USA.

  2. You article misses two important points first Industrial and commercial users in addition to the energy charge you listed pay “demand charges”. Demand is the highest amount of energy used in ANY 15 minute period. Industrial demand charge is $17.78 per kW with a minimum demand of 1000 kW’s. So an Industrial customer has at minimum an additional $17,780 charge per month. Demand Charges on Industrial customers usually account for 35%-40% of their bill ( same with commercial users) You need to add that in to do a fair comparison as residential does not have this charge.

    Second infrastructure to run service to a customer is quite expensive and its many years before the utility full recoups its up front costs. Commercial and Industrial users get a little bit of an volume discount (They buy at Costco and Residential customer buy at 7-11) Also Now don’t forget Industrial customer pay $200 monthly ‘User” fee!

    Lastly the PUC does not allow utilities to have one class of rate payers subsidize another if you feel MID is doing this you can file a complaint and argue it to the PUC if you right you will get paid for your time.

    I am not a fan of MID management but this is not a fair attack when there are many other places to rightly criticize them.

    • No offense but the PUC or Public Utilities Commission has no control over MID.

      Also if you work the math from the report KWH vs Charges for all of MID’s customers you will find my rate comparison fair so I feel the article is balanced.

  3. On on average basis revenue per kWh is 75% higher on residential customers than Industrial and 22% higher than commercial customers. This ratio is down from the historic difference of 85%. Total energy costs are about $200,000,000 of the $300,000,000 budget. Infrastructure costs (transmission and distribution make up a significant part of the rest. Commercial and industrial customers are about 20% of customer base residential the balance. These fixed costs are spread among rate classes based upon the costs of the infrastructure and residential costs is a disproportionate share this along with large customers get in essence a volume discount(buy your food by the ton instead of by the pound and see how much you save).

    The PUC does not have as much control over MID as say PG&E but they still have some jurisdiction. One example is the jump in residential rates after 500 kWh’s in monthly usage. Smaller utilities and publicly owned do get more latitude but many regulations kick in once a utility has more than 70,000 customers. I mention this things not to be an apologist for MID but because if we want better governance its important to be accurate and show a proper context.

  4. Interesting you point out large customers get a volume discount yet don’t mention residential customers are penalized for using more electricty. Your application of the ‘Ton of food’ analogy doesn’t work.

    These large industrial users actually drive up the cost of electricty for the residential users. The system is designed to give preference to industry over residents and since the ratepayers are the owners of MID we are the ones who need to bring change to the paradigm.

  5. I’ll agree with that, the residential customers being the majority are getting the shaft. I say make it a flat rate across the board. No one mentioned how much the farmers and ranchers in Ag are paying for electricity….I would hate to think the County Board of Supervisors are catching another break while residents are suffering

  6. Framers pay on Average about 13.5 cents per kWh. They have time of use rate with the lowest being 11.5 cents for night-time winter power and 14.2 cents for summer power plus a connected load of typical about $150 per month.

    Also to follow up on previous post from eyeonmodesto residential customer have the rate increase after base usage as a policy mandate from the CPUC. This is a policy set forth by the legislature.

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