How Your Power Bill Is Built

A power bill looks like one number. It is really the output of a formula the state approved, applied to your meter readings, plus a handful of adjustments that change on their own schedules. Once you can rebuild a bill from the tariff, you can check any utility's claim about what a rate change "means for the average customer."

The pieces of a residential bill

Most residential customers do not pay a demand charge, but most large commercial and industrial customers do. And the fixed charge is quietly one of the most contested lines on any bill. Raising it collects more money from small users and less from big ones. Utilities like it because it stabilizes revenue. Consumer and solar groups often oppose it because it shrinks the reward for using less. In Idaho Power's 2025 rate case, the residential service charge stayed at $15.00 a month.

Rate classes

Before any rate is set, the utility runs a cost-of-service study that divides its revenue requirement among classes of customers based on how each uses the system: how much energy, how much peak demand, at what voltage, in which season. Typical classes are residential, small general service, large general service, large power or industrial, and, in farm country, irrigation. A class that peaks in July when the system peaks gets assigned more of the cost of peaking plants.

Class allocation is where large customers fight hardest, because shifting even half a percent of costs between classes moves millions of dollars. When a new data center or factory comes on, watch for a special contract or a new rate schedule, and whether the cost of new plants and lines built for it lands on that customer or spreads across everyone.

Worked residential bill

Service charge:                         $15.00 per month
Summer energy charge (June to August):
  First 800 kWh:                        $0.1000 per kWh
  801 to 2,000 kWh:                     $0.1250 per kWh
  Over 2,000 kWh:                       $0.1480 per kWh
Power cost adjustment:                  $0.0060 per kWh (all kWh)
Energy efficiency rider:                3.0% of the above
Franchise fee:                          1.0% of the above plus rider

Service charge                              $15.00
Tier 1: 800 x $0.1000                       $80.00
Tier 2: 550 x $0.1250                       $68.75
PCA:   1,350 x $0.0060                       $8.10
Subtotal                                   $171.85
Efficiency rider: 171.85 x 0.03              $5.16
Subtotal                                   $177.01
Franchise fee: 177.01 x 0.01                 $1.77
Total                                      $178.78

Tiered rates like that are designed to send a conservation signal to the biggest summer users. Time-of-use rates do something similar by hour: a higher price in, say, 5 to 9 p.m. on summer weekdays, lower overnight.

Demand charges

For a business, the bill usually adds a charge for the highest draw. Most utilities measure demand as the highest average kW over any 15-minute window in the month. The logic goes back to lesson 1: the utility has to build wires, transformers and plants big enough for the tallest bar, even if that bar lasts only a quarter hour.

Fuel and power cost adjustments

Base rates set in a rate case assume a certain cost of fuel and purchased power. Reality differs. Hydro output swings with snowpack. Gas prices spike. Rather than file a new rate case every time, most states let utilities true up those costs through an adjustment mechanism.

Idaho Power's version is the Power Cost Adjustment (PCA). It runs on an April to March year and has two parts: a forecast of the coming year's fuel and purchased power costs, and a true-up of last year's forecast against what actually happened. The commission's 2026 order describes it passing 95 percent of the annual difference between actual and base power supply costs to customers, in both directions. The 5 percent the company keeps or absorbs is there to give it some reason to control costs.

Full-year numbers and Idaho Power's tiers

For calendar 2025, EIA's Electric Power Monthly (February 2026 edition, Table 5.6.B, preliminary) puts average residential prices at 11.82 cents per kWh in Idaho, 32.54 cents in California and 17.30 cents nationally. California is the highest in the lower 48; only Hawaii, at 40.59 cents, is higher. So California households paid about 2.75 times Idaho's rate, roughly a third as much in Idaho, not a fifth.

Idaho Power's residential energy charges are tiered by monthly use. Outside summer: 9.93 cents for the first 800 kWh, 10.43 cents for 801 to 2,000, 11.01 cents above that. June through September: 12.12, 13.30 and 14.62 cents. A $15 monthly service charge sits on top. Its last base-rate increase before the 2025 case came in case IPC-E-24-07: Order No. 36438 granted 3.73 percent ($50.6 million) effective January 1, 2025, for investment, labor and inflation.

Pierson's What Power Really Costs Idaho compares Idaho and California. Check its 5-to-6-cent figure for Idaho against the tiers above before you quote it.