Transmission charges are the costs associated with delivering the electricity from the power generators to the customer’s Local Distribution Company (LDC). The transmission lines can also be referred to as the power grid, electric grid, or the grid. The United States consists of thousands of miles of high-voltage power lines and millions of low-voltage power lines. This vast network of power lines connects the electricity generated from power plants to the customers.
There is a distinction between transmission lines and distribution lines. Transmission lines carry electricity over large distances while distribution lines are used by the LDCs to deliver the electricity to homes and businesses. Distribution lines operate on a low voltage to safely deliver the electricity to the customers. Transmission lines operate on a high voltage and depending on the region, can be owned by private investors.
How do Transmission Charges Affect the Electric Bill?
Depending on the region you live, the transmission charges may be charged to the customer by the LDC or the energy supplier. If you live in an area that is deregulated, then the transmission charges may be included as one of the components of the supply rate. The supply rate is also known as the price to compare and is used while comparing energy prices.
If you live in a deregulated area and the transmission costs are charged to the customer by the energy supplier, then you may have options on how it shows up on the electric bill. It may be included as a fixed component of the supply rate or it can be passed through as a separate line item. These two options may affect how much you pay! If you’re conservative, then the safe option is to include it as a fixed component of the supply rate.
Understanding the Transmission Charges
In PJM, the main transmission rate is the Network Integration Transmission Service (NITS). A secondary transmission cost is the Regional Transmission Enhancement Plan (RTEP). NITS is the method by which transmission owners collect overhead costs and revenue requirements from PJM customers. The RTEP covers projected upgrades to the system so it can continue to function properly and be reliable to all PJM customers.
An increase in NITS and RTEP charges will affect all customers across the board. This means whether you are receiving generation charges from the LDC or if you have already switched over to a competitive energy supplier, the increase will be reflected on the electric bill. Most energy suppliers will pass through any increases in these charges as a separate line item on the electric bill. It is also possible these charges can decrease. If that is the case, the customer will receive a credit on the electric bill.