C&I Delivery Charges & Rate Classes
Even in competitive electricity markets, the local utility (Transmission/Distribution Service Provider or TDSP/TDU) charges regulated rates for delivering power over its wires. These delivery charges are separate from the cost of the electricity supply itself and are unavoidable.
Understanding these charges is critical because they can represent a significant portion (often 30-50% or more for large customers) of the total electricity bill. Delivery charges depend on the customer’s service class (or rate class), which is typically determined by their voltage level and peak electricity demand (kW).
Structure of Delivery Charges
Utility delivery tariffs typically include several components:
- Fixed Monthly Customer Charge: A flat fee per month regardless of usage, covering basic service costs like billing and administration.
- Metering Charge: Sometimes separate, covers the cost of the meter and reading.
- Distribution Demand Charge ($/kW): A charge based on the customer's peak electricity demand during the billing period. This recovers the cost of local distribution infrastructure (wires, transformers) sized to meet that peak. *This is often the largest component for C&I customers.*
- Distribution Volumetric Charge ($/kWh): A smaller charge based on total energy consumed, covering variable distribution costs.
- Transmission Charge: Covers the cost of using the high-voltage transmission system. Can be billed per kW (often based on contribution to system peak) or sometimes per kWh.
- Riders and Surcharges: Additional fees approved by regulators to recover specific costs like energy efficiency programs, storm recovery, nuclear decommissioning, or state taxes.
Examples in Key Deregulated States
Delivery charge structures vary significantly by state and utility. Here are illustrative examples for large C&I customers:
Texas (ERCOT) – Example: Oncor “Secondary > 10 kW”
In ERCOT's energy-only market, delivery charges cover T&D. For customers >10 kW demand:
- Fixed Customer Charge: ~$32.43/month (as of 2025).
- Distribution Demand Charge: ~$10.66/kW (based on monthly non-coincident peak).
- Distribution Volumetric Charge: Very small (~$0.000223/kWh).
- Other charges: Metering, Transmission (often $/kW), various riders (e.g., TCRF).
- Note: No separate capacity charge from the utility.
Source: electricityplans.com
Illinois (PJM & MISO) – Example: ComEd Delivery Classes
ComEd assigns classes based on peak demand (Small 0-100kW, Medium 100-400kW, Large 400kW-1MW, etc.). Delivery charges include:
- Fixed Customer Charge: Varies by class (e.g., ~$19/mo for Small, ~$140/mo for Large as of 2024).
- Distribution Facilities Charge (DFC): $/kW demand charge, varies by class and voltage (e.g., ~$11.25/kW for Large Secondary).
- Volumetric Charge: Minor (e.g., state distribution tax ~$0.00038/kWh).
- Note: PJM capacity and transmission costs are handled separately via supply contracts (based on PLC/NSPL tags).
Source: azure-na-assets.contentstack.com (ComEd Rates)
Pennsylvania & New Jersey (PJM) – Example: PPL Electric “GS-3”
Utilities like PPL have multi-tier general service rates. Large C&I (e.g., PPL GS-3 >100kW) pay:
- Monthly Service Charge: e.g., ~$100/month.
- Distribution Demand Charge: $/kW based on non-coincident peak, varies by voltage (~$8-12/kW range).
- Volumetric Charges: Minimal, often within riders.
- Transmission Charge: Often passed through based on NSPL tag or included in delivery rates.
- Note: PJM capacity costs handled via supply.
Source: pplelectric.com
New York (NYISO) – Example: ConEd Service Class 9 (SC9)
General large commercial class (≥10 kW). Billed based on:
- Monthly Customer Charge: Varies, ~$100+.
- Energy Delivery Charge: Volumetric (~$0.03–$0.05/kWh range).
- Demand Charge: Significant charge (~$30+/kW) based on highest 30-minute demand.
- Rate I (Conventional): Applies to peak demand above a small base amount.
- Rate III (Time-of-Day): Separate, potentially higher demand charges during defined peak periods (e.g., summer weekdays 8am-6pm).
- Standby Rates (SC9 Rate IV/V): For customers with onsite generation, include contract demand and daily as-used demand charges.
- Note: High demand charges make peak management critical. NYISO capacity costs handled via supply (ICAP tag).
Source: coned.com
California (CAISO area - Technically Regulated) – Example: SCE TOU-8 (Primary >500 kW)
While technically regulated, CA IOUs have complex C&I rates worth noting:
- High Monthly Customer Charge: e.g., ~$420/month.
- Demand Charges: Often multiple types - Non-Coincident Peak (NCP) demand (~$19-23/kW) AND On-Peak demand charges. Often include demand ratchets (e.g., billing demand = max(current peak, 50% of annual peak)).
- Time-of-Use (TOU) Energy Charges: Volumetric rates vary significantly by time period ($0.05–$0.15+/kWh).
Source: sdge.com, sce.com examples
Comparing Delivery Rate Structures
The table below summarizes key components across sample large C&I delivery tariffs:
| Utility / Class | Service Level | Monthly Base Charge | Demand Charge ($/kW) | Energy Charge ($/kWh) | Notes |
|---|---|---|---|---|---|
| Oncor (TX) – Secondary >10 kW | Secondary (>10 kW) | $32.43/mo | $10.66/kW (Dist.) | $0.000223/kWh | ERCOT (No capacity; T&D in delivery) |
| ComEd (IL) – Large (>400 kW) | Secondary (>400 kW) | $139.54/mo | ~$11.25/kW (DFC) | ~$0.00038/kWh (Tax) | PJM (Capacity/Trans. via supply PLC) |
| PPL (PA) – GS-3 | Secondary (>100 kW) | ~$100/mo (est.) | ~$8–12/kW (Volt. dep.) | Minimal (in riders) | PJM (Capacity/Trans. via supply) |
| ConEd (NY) – SC9 Rate I | Secondary (>10 kW) | ~$100/mo (varies) | ~$30+/kW (30-min peak) | ~$0.03–$0.05/kWh | NYISO (High demand; Cap. via supply ICAP) |
| SCE (CA) – TOU-8 | Primary (>500 kW) | ~$420/mo | $19–$23/kW (NCP w/ ratchet) + On-Peak | $0.05–$0.15/kWh (TOU) | CAISO (Regulated; Complex TOU/demand) |
Note: Exact rates are illustrative examples based on approximate recent tariffs (c. 2023-2025) and subject to change. Always consult the current official utility tariff sheets.
Key Takeaways
- Demand Charges Dominate: For large C&I customers, demand charges (both distribution and potentially transmission) are often the most significant part of the delivery bill.
- Rate Class Matters: Being correctly assigned to a utility rate class is crucial. Thresholds for demand billing vary (e.g., 10 kW, 100 kW, 500 kW).
- Optional Rates: Some utilities offer choices within a class (e.g., standard vs. TOU demand charges) which can provide savings opportunities based on load profile.
- Identify Non-Bypassable Charges: Energy brokers must clearly identify these utility delivery charges for clients, as they apply regardless of the chosen competitive energy supplier.