Rate-Making Principles

OPPD Rate Design

OPPD’s rates use standard utility pricing, commonly known as DEC pricing. DEC stands for Demand, Energy and Customer. OPPD’s rates include charges for each of these.

Demand relates to the amount of electricity used by customers at a specific time. OPPD’s demand rates measure demand in 15-minute intervals. OPPD builds power plants and transmission lines to supply electricity. OPPD’s generating plants and transmission lines must be large enough to supply electricity at all times. Demand charges recover the costs of building and maintaining power plants and transmission lines.

Energy relates to the amount of electricity used by customers over a period of time, usually billed monthly. OPPD consumes fuel (coal, natural gas and nuclear fuel) to generate electricity. Energy charges recover fuel and other costs that vary with the amount of energy consumed.

Customer charges recover the costs related to billing a customer. These costs include the meter, meter reading, call center, billing system, payment processing, collections, etc.

In summary,

• Demand charges recover fixed costs to produce and supply electricity for all customers whenever they want it.
• Energy charges recover variable costs to produce your electricity.
• Customer charges recover costs to supply, meter, bill and receive payments from customers.

OPPD’s residential and small commercial rates do not have separate demand charges. Measuring demand requires more expensive metering, and demand billing is more complex. Therefore, OPPD rates contain stated demand charges only for larger customers (over 50 KW demand). If the rate does not have specific demand charges, the rate recovers demand costs through the energy charges.

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