Where does your energy dollar go?Ron Holcomb | Thursday, March 30, 2017
We all want the best value for our dollar. Just as you research and comparison shop when you’re choosing a new appliance for your home, Tipmont is constantly working to maximize the value we provide to our members
There are two ways to explore where your energy dollar goes: inside your home (how you use your energy) and outside your home (how Tipmont uses your energy dollars).
Inside your home
According to the nearby pie chart, about half of your typical monthly energy consumption is heating and cooling. Of that half, 42 percent comes from heating with only 6 percent from cooling. During winter months when the weather turns colder, we use more energy.
The difference in heating versus cooling is due to the difference in temperature inside and outside your home. If I want my house to be 70 degrees inside and its 20 degrees outside, my HVAC system has to make up 50 degrees difference in temperature. That’s a lot of work. Even on a 100 degree summer day, the HVAC system only has to make up about 30 degrees difference versus that 50 degree variance in winter.
The best tip I can offer is to take advantage of Tipmont’s free in-home energy assessment. Our energy advisor has multiple tools that can identify air leaks and other common causes of inefficient energy usage. At the end of the assessment, you’ll receive a custom report detailing the steps you can take to save on your energy bills. Call (800) 726-3953 to schedule an assessment.
Outside your home
The second part of this question looks at where your energy dollar goes when you pay your energy bill each month.
1. Fuel costs: 69%
69% of Tipmont’s costs are generating the power to supply your home with electricity. We purchase power from Wabash Valley Power Association, a generation and transmission cooperative based in Indianapolis. Our mutual goal is providing electricity to you at a competitive and stable price, while minimizing risk. There are an abundance of factors that determine these costs, including power generation, building new transmission, supporting load growth and remaining compliant with government regulations. I’ll explore these further in a future column.
2. Financing costs: 12%
Utilities have two primary sources of cash to scale, operate and maintain their systems: the rates members pay for service and financing. Financing is necessary to help maintain stable rates and upgrade, replace and build new substations and lines. It also helps avoid generational cost-shifting, or recovering the cost of an asset well before its depreciated life ends.
Our finance team monitors interest rates constantly with the goal of locking in the lowest possible rate. Good financing decisions combined with good timing has led to Tipmont’s long-term interest rates being a half percent lower than the median of all U.S. electric cooperatives in 2015, the latest year that data are available. A half percent may not sound like much, but over a long time frame, a half percent of interest equates to millions of dollars in interest savings.
3. Operation and maintenance: 11%
It takes a lot of money to operate and maintain Tipmont’s electrical system. Much like the items you own, such as your home or your car, we must repair or replace parts of our electrical system that malfunction. Tipmont must also invest in new equipment and systems to ensure we can keep up with the growing demand for reliable electricity.
4. Customer and general expenses: 11%
I often hear from members how much they appreciate being able to quickly speak with a local and live person when they call. Whether they’re calling to report an outage, request a service order or ask questions about their bill, we pride ourselves in being local and available to serve you. These expenses also include expenses common to any business such as technology, building maintenance and related labor.
Tipmont’s unwavering commitment to supplying affordable and reliable power to your home is evident both in our balance sheet and our service to you. We work each and every day to provide the electric energy that most in modern society agree would be hard to live without.
- Last modified: Friday, March 24, 2017
Ron Holcomb is CEO of Tipmont REMC.