Wiktor Wise
A rate rider is a temporary credit or charge added to a monthly bill by an electricity or gas distributor. Riders allow for the recovery of variable costs like fuel needed for power generation, or for the administration of programs designed to lower energy costs and demand through greater efficiency. Riders can also serve as a means to apply credits for things like tax code changes. Rider 8 is likely referring to a specific rate rider, which is a charge or credit that is added to a customer's bill to cover the cost of a specific program or service. This could include things like renewable energy costs, storm recovery costs, or adjustments to the price of electricity transmission.
| Characteristics | Values |
|---|---|
| Definition | A rate rider is a temporary credit or charge that is added to your monthly bill on behalf of the electricity or gas distributor. |
| Purpose | Riders allow for the recovery of variable costs like fuel needed for power generation, or for the administration of programs designed to lower energy costs and demand through greater efficiency. Riders can also serve as a means to apply credits for things like tax code changes. |
| Calculation | Rider = Actual cost of providing service – Approved rate for providing service |
| Examples | Renewable Energy Rider, Storm Recovery Charge, Interim Adjustment, Transmission Deferral Rider, Local Access Fees |
| Applicability | Duke Energy, ATCO Electric, ENMAX Power Corp, EPCOR Distribution & Transmission, FortisAlberta, AltaGas Utilities, and more. |
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What You'll Learn
Riders are charges to recover costs of specific programs
Riders are charges that allow utility companies to recover the costs of specific programs, credits, and purchases. They are not included in the standard base rates. These charges are used to recover variable costs, such as fuel needed for power generation or the administration of programs designed to lower energy costs and demand through greater efficiency. Riders can also be used to provide credits for things like tax code changes.
Riders are reviewed annually or over a specific time span by the North Carolina Utilities Commission, which is the governing body that ensures approved riders are in the customers' best interest. Riders often help advance state policy goals, such as funding to bring more solar energy to the grid (the Renewable Energy Rider) or saving customers money, like the Storm Recovery Charge, which recoups extreme storm repair costs through bonds rather than including the repairs in base rates, saving customers millions.
Riders can be listed individually on a bill or totaled together as a Summary of Rider Adjustments. Rider adjustments can include changes in fuel costs, renewable energy costs, and DSM/EE costs. These changes are independent of base rate changes.
Duke Energy, for example, has a rider that is assessed on a per-account basis, meaning each residential, commercial, or industrial customer pays the same fixed amount by classification, regardless of monthly usage. This charge changes each September 1 for DEC and December 1 for DEP.
Another example is the Quarterly Transmission Adjustment Rider (QTAR), which adjusts the current costs of electricity transmission and estimates costs for the next quarter. It is calculated as a variable rate ($/kWh) based on the transmission component of the Total Distribution Tariff and is adjusted four times a year (January 1, April 1, July 1, and October 1).
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$3398
Riders can be used to apply credits, such as tax code changes
Riders are additional charges or credits that are not included in the standard base rates of electricity bills. They are used to recover the costs of specific programs, credits, and purchases. One of the primary purposes of riders is to allow utility companies to recoup variable costs, such as fuel needed for power generation or repairing electrical infrastructure damage caused by severe weather events.
Riders can also be used to apply credits, such as tax code changes. For example, the Municipal Assessment Rider includes a tax component and is applied to customers in municipalities where property taxes are levied. Similarly, the Storm Recovery Charge rider helps to recover the costs of repairing electrical infrastructure after significant weather events, and this cost is recouped through bonds rather than base rates, ultimately saving customers money.
Additionally, riders can be used to promote state policy goals. For instance, the Renewable Energy Rider funds the integration of more solar energy into the grid. Riders can also be used to tailor renewable energy solutions for businesses, as seen with the Renewable Energy Rider program by Madison Gas and Electric. This program allows businesses to partner with MGE to power all or part of their operations with renewable energy.
Riders are reviewed and approved by governing bodies such as the North Carolina Utilities Commission or the Alberta Utilities Commission (AUC). These commissions ensure that approved riders meet the needs of both the customers and the utility companies, maintaining a balance between safe and reliable energy provision and customer affordability.
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Riders can be used to fund state policy goals, such as renewable energy
A rider is a charge, credit, or piece of legislation that is not included in the standard base rates or bills. Riders can be used by utility companies to recover the costs of specific programs, credits, and purchases. For example, in the context of electric rates, a rider can be used to recover the costs of repairing electrical infrastructure damage caused by significant weather events, such as hurricanes or severe icing.
In the United States, riders have been used by members of Congress to advance controversial measures or policy goals without building specific coalitions in support of them. These are known as "must-pass" pieces of legislation, which, if not passed, can lead to a partial or full government shutdown.
Riders can also be used to fund state policy goals, such as renewable energy initiatives. For example, the Renewable Energy Rider in North Carolina helps to fund the integration of more solar energy into the state's electrical grid. This rider is reviewed annually by the North Carolina Utilities Commission to ensure it is in the customers' best interest while also meeting the needs of the utility to provide safe and reliable energy.
Additionally, riders can be used to apply credits for things like tax code changes. For instance, the Municipal Assessment Rider includes a tax component and a franchise fee component for customers in municipalities where the local authority charges a property tax.
Overall, riders provide a mechanism for utility companies and policymakers to adjust charges or implement specific initiatives that may not be covered by standard rates or legislation.
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Rider adjustments are a summation of various charges
For example, the Storm Recovery Cost rider is used to recover the costs of repairing electrical infrastructure damage caused by major hurricanes, severe icing, or other weather-related events. This rider is tracked and trued-up every six months (on January 1 and July 1). The Storm Securitization Recovery Cost rider, on the other hand, recovers the incremental costs of certain clean energy purchases that are mandated by state law. This rider changes twice a year, on January 1 and July 1.
The Renewable Energy Rider is another example of a rider adjustment that helps advance state policy goals, such as funding to bring more solar energy to the grid. Rider adjustments can also help save customers money, like the Storm Recovery Charge, which recoups extreme storm repair costs through bonds, resulting in lower base rates.
Most rider adjustments change annually, but these changes may not align with a customer's billing period. For instance, if a billing period spans from November 15 to December 15, the energy usage for that period would be billed under two different fuel rates: the "old" rate before December 1 and the "new" rate after. This would result in two distinct Summary of Rider Adjustment charges.
Rider adjustments are reviewed annually or over a specific period by governing bodies, such as the North Carolina Utilities Commission, to ensure they are in the customers' best interest while meeting the needs of the utility provider.
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Rider K adjusts the price of electricity transmission
A rate rider is a temporary credit or charge added to a monthly bill on behalf of the electricity or gas distributor. Regulated electricity distribution and transmission companies can charge rate riders to adjust any differences between the actual cost and the approved rate for providing service.
Rider K, also known as the Transmission Deferral Rider, adjusts the price of electricity transmission regarding transmission access charges and related services provided by the AESO (Alberta Electric Systems Operator). It is the same type of rate rider as FortisAlberta's QTAR and ATCO Electric's Rider S. Rider K is adjusted four times a year: on January 1, April 1, July 1, and October 1.
Rider K is a means of ensuring that utility costs are accurate. It is a way for electricity and gas distribution and transmission companies to collect or refund the difference between actual and estimated costs for delivering energy. These companies are required to charge rates based on a "cost of service" approach, and rate riders help to ensure that the rates charged reflect the true cost of providing service.
Rider K is just one example of a rate rider that adjusts the price of electricity transmission. Other examples include Rider S (SAS Deferral) and the Quarterly Transmission Adjustment Rider (QTAR). These rate riders allow for adjustments in the price of electricity transmission, specifically concerning AESO-related transmission access charges.
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Frequently asked questions
A rider rate is a temporary credit or charge added to your monthly bill on behalf of the electricity or gas distributor.
Rider 8 refers to the Interim Adjustment Rider. This rider applies to all electric services throughout the territory served by the company when a charge or refund is approved by the AUC.
A kilowatt (kW) is the rate at which a customer consumes energy and measures the demand placed on power plants. A kilowatt-hour (kWh) is a measure of electric energy consumed by electric loads such as appliances in your home.
Examples of rider rates for electricity transmission include the Transmission Deferral Rider (Rider K) and the Quarterly Transmission Adjustment Rider (QTAR). These riders adjust the price of electricity transmission regarding access charges and related services.
The Renewable Energy Rider (RER) program provides renewable energy to power all or a portion of a business. This model allows energy providers to partner with business customers to tailor a renewable energy solution.
