Costs to Serve OPPD Customers

Each month, your OPPD bill covers many costs. It includes costs to generate electricity, purchase power, deliver electricity through the distribution and transmission systems to ensure maximum capacity needs are met. 

Providing reliable, affordable and environmentally sensitive energy services to our customers is our mission. OPPD carefully plans to ensure that power generation capacity, transmission, and distribution systems are reliable and ready to deliver the maximum possible demand at any time, no matter the situation. Utilities like OPPD must build fair and equitable rates that compensate for these costs, while providing reliable power to our customers — no matter how much energy they consume.

Transmission vs. Distribution

Both systems are made up of similar components, but serve different purposes. To think about it another way, consider our vehicle transportation system. Freeways and Interstates carry large volumes of traffic, at higher speeds, across greater distances – like our transmission system. Local roads and neighborhood streets have fewer lanes, reduced speeds and connect us to our homes, schools and workplaces – just like our distribution system.  

Current OPPD Rate Structures 

Residential and Small General Service Customers

This rate structure applies to the vast majority of OPPD customers. The current rate structure includes energy and customer charges.  The energy charge reflects energy generation costs, generation demand costs, transmission costs and a portion of distribution costs. The service charge blends customer costs and a portion of distribution costs.

Large General Service Customers

This rate structure applies to businesses and industries that require large amounts of power for their operation.  The rate structure includes demand, energy, and customer charges.

Key Challenges

Changes in Energy Usage

The way customers use energy is changing. The increasing diversity of needs within the residential and small general service classes is making it more challenging to recover costs solely based on a customer’s electricity consumption (kWh). In addition, energy efficiencies add to the complexity of recovering fixed costs through an energy charge.

Real Time Market Impacts

The actual cost OPPD incurs to supply electricity to homes and businesses can change minute by minute based on energy market pricing, electricity demand, and generation costs - which can also vary based on the season and/or time of day. Extreme temperatures and generation reliability can drive significant changes in the price of electricity, with the highest costs typically occurring during summer months due to cooling homes and buildings.

Enabling Technology

For OPPD’s Residential and Small Commercial Customers, customers are equipped with traditional meters that only measure the amount of electricity consumed by a household in a month, measured in kWh. On the other hand, Large Commercial and Industrial Customers have metering technology that records both energy (kWh) and demand (kW) consumption on an hourly basis that enables both demand and energy charges. While the metering technology is more advanced for our larger customers, it does not enable some of the more sophisticated rate offerings due to its limitations.

Consequently, to transition towards rate structures with more sophisticated price signaling and more accurate costs recovery will require investing in metering and other enabling technology that will allow greater customer participation and promote efficient utility resource utilization. 

Where Do We Go from Here?

OPPD is moving towards implementing Advanced Metering Infrastructure, or AMI. This will give OPPD the option to implement advanced rate structures to improve the way costs are recovered and provide customers more options to manage their bills.