Do utility 'connect fees' unfairly punish smaller users? 


What's not to like about electric power. Perhaps the most flexible and useful energy source, it runs countless appliances of convenience and necessity — even my car.

I live in Peyton and purchase my electricity from Mountain View Electric Association rural electric co-op, also located in Peyton, whose employees have been notably accessible in the last 27 years that I've been a customer. I've made appointments to discuss electricity issues with congenial people, although they were upset with me when I criticized them in the New Falcon Herald for their demonstration windmill, which had been erected in a spot that shaded its demonstration solar panels for a couple hours each morning, apparently costing "my fellow rate-payers" $10,000 to re-situate.

But the company representatives cannot change a corporate rigidity that has set in. And something insidious has grown within the co-op over recent years: Separate from the kilowatt-hour power usage charge, MVEA charges a monthly "connect fee," also called a "grid access fee" or "facilities charge." No matter how much or how little power any of us use, the separated cost to plug in to the grid is the same.

When my wife and I became customers in 1988, that fee was $2 plus change.

"That's strange," I thought. "Why would they break out this fee? Why not roll it into the cost of electricity used?"

The fee nearly doubled to $5.25 in 1995. It rose to $7.80 in 2002, then $10.20 in 2003, and $13.95 by 2007. After a breather, in 2011 the fee jumped to $19.95, and in 2013 it jumped again to its current rate of $29.95 per month — no matter how much power you use. (Colorado Springs Utilities' current "access charge" is .4115 cents a day, amounting to $12.35 monthly. Another separate access charge line-itemized on bills is calculated by power used, at .0763 cents per kWh, totaling roughly another $12 for very modest monthly usage.)

Let's put that in perspective. Say you head downtown to Rico's for a cup of coffee. But the owner (who, disclosure, is a friend of mine) stops you at the front door with his hand out, demanding $30 "to maintain the facility" before he lets you step inside.

"Ridiculous! A $32 cup of coffee?"

Back to reality: Why don't restaurants charge an access fee? They have a facility to maintain and repair too — the building, rent, cooks, servers, equipment and of course, the utilities. So why not charge a blocky, up-front one-size-fits-all users' fee to all customers? For that matter, even similar energy-type businesses, like propane companies, don't charge any one-size-fits-all fee. Why not? Every business has a facility to maintain.

But restaurants and propane companies have competitors. They must roll their cost for the facility into the product they sell, as a percentage. If they didn't, we'd take our business elsewhere. No matter what we label ourselves with regard to economics, we humans instinctively know a good deal from a bad deal. A uniform, one-size-fits-all access fee forces small users of a product to subsidize large users of a product. We notice. But over the course of history, when it comes to the price of energy, what has the general citizenry been able to do? Nothing. We know it, and the power companies do too.

But the times, they are a-changing. It reminds me of the classic telephone operator skit on Rowan & Martin's Laugh-In. She was often portrayed speaking with some hapless, unseen customer and usually ended the call with: "Sir, we're the Phone Company. We don't care, we don't have to!"

And so it has been for monopoly electric power. Though the people within the power company do care — they work hard to restore service quickly in often-dangerous conditions due to an accident or weather — the problem is the old business model forced upon power customers from the top.

But rapidly falling prices for renewable home power means soon we shall all enjoy cheaper alternatives to their grid power. Solar panels now cost under a dollar per watt to buy, and with no moving parts, they last for decades. Associated charge controllers, inverters and batteries designed for off-grid use are extremely reliable. As power companies squeeze too hard with ever-increasing, unfair fees, people will begin to leave, because now they can.

Using myself as an example: With modern Energy Star appliances and all LED or CFL lighting, plus a water well, my bill for electricity alone is often around $18 per month. But the connection fee is still $29.95. It's costing me more to plug in than what I'm actually using.

The power company likes the big fee, because I can't conserve my way out of it. The company can pretend its electric rate is low because the kilowatt-hour charges are separated from the fee. By this method, it hides the true cost of its power. MVEA's charge of around 10.6 cents per kilowatt-hour sounds reasonable until you realize the entire cost of doing business with the company. Over a fairly typical month, for example, we use 175 kilowatt-hours of electricity and incur a grid-fee-inclusive bill of around $48.50, meaning we pay a whopping 28 cents per kilowatt-hour.

Solar is cheaper than this now, and with the new Tesla Powerwall battery (see "The Tesla Effect," June 3) and others coming online, off-grid living is becoming more viable than ever. Homeowners can have solar power installed and pay it off over time, with no rate or fee hikes. The grid, however, has no payback. You are always a renter.

It's time for power companies to smash the negative feedback loop they've created with their antiquated business model. As our appliances have become more efficient, the companies have sold less electricity, squeezing us with fixed junk fees. They could emulate successful businesses, from department stores to the corner grocery, and integrate facilities costs into the products they sell.

But an MVEA rep I spoke with says the co-op must charge the same fee to users large and small, to cover costs as electricity use falls.

"Really?" I ask. "So you're saying that electricity cannot stand on its own as a viable product to sell?"

With all costs rolled into the product sold, prices would rise, but at least those who use less power would not be subsidizing those who choose not to conserve. The grid fee short-circuits the motivation for power conservation, and thus it indirectly encourages pollution generated by traditional power plants.

Punishing those who conserve with an ever-increasing and unfair junk fee means that more of us will leave for renewable home power alternatives. The negative feedback loop for power companies will tighten. As more and more residential power users flee rising costs and fees, those costs will have to rise further for those who remain, forcing even more customers to abandon monopoly electricity.

But the power company does have an opportunity here to join the future. After all, who is more trusted with electricity than the power companies? They could offer solar and wind packages, grid-tied or stand-alone, along with their usual grid power products. Like it or not, renewables are coming. For decades the power companies have been able to fold their arms and say, "Pay whatever we charge, or we'll disconnect you!"

To that I'd say, be careful what you wish for. Remember the words of Princess Leia to Darth Vader: "The tighter you close your grip, the more systems will slip through your fingers!"

Tom Preble formerly contributed to the Denver Post's Sunday "Colorado Voices" segment and wrote "Prairie Tales" for the New Falcon Herald. He and his wife Ilene live on a ranch Peyton.

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