Understanding the "Cost of Debt" on Your Electric Bill
We’ve been hearing a lot of talk about electric bills lately, especially from some folks who feel like rates are creeping higher than they should. Is that a fair concern? Absolutely. Nobody likes surprises—especially when it involves parting with more of your hard-earned cash. But let’s dig into the nitty-gritty of how your co-op bill is determined, plus a few ways you can keep it in check.
Meet the Team
In the video, Angie (our Marketing and Media Specialist) sits down with Constance (Billing Coordinator) and Kala (Member Service Representative in Marshall). They answer questions we get from members all the time.
Who Determines Your Rate?
Ever wonder who actually decides the rate you pay for electricity? (Hint: it’s not Petit Jean Electric Cooperative alone.) Electricity rates are influenced by multiple factors:
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The wholesale cost of buying power
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Federal and state regulations
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Demand on the grid
The co-op’s role is to take those costs and ensure the final numbers on your bill are fair and accurate. We’re not just making them up. The amount you see each month reflects the real costs of producing, purchasing, and delivering power.
But First, Here are Some Key Terms & Definitions You Should Know
✅ Cost of Debt Adjustment:
This is a charge on your bill that changes when the cooperative's cost to borrow money goes up or down. Petit Jean borrows money to pay for improvements like poles, wires, transformers, trucks, buildings, and their fiber optic network. This adjustment is approved by the Arkansas Public Service Commission and is recalculated each quarter based on actual borrowing costs.
✅ Usage:
How much electricity you use in your home or business, measured in kilowatt hours (kWh). The more you use, the higher your electric bill (and the cost of debt) will be.
✅ Kilowatt Hour (kWh):
A unit that measures how much electricity you use. Your bill is based on the number of kilowatt-hours you consume. More kWh means more electricity used and a higher bill.
✅ Operational Fiber Network:
A fiber optic network that helps our cooperative improve communication between the substations and equipment. This network makes the power delivery more reliable and helps avoid outages, especially during bad weather.
✅ Substation:
A facility that switches, controls, or changes electricity voltage before it is sent out to your home or business.
✅ Outage:
A period when the power goes off. This can happen because of storms, accidents, or repairs.
✅ Transformer:
A device that changes the voltage of electricity so it can safely travel from the power source to your home or business. Transformers have become significantly more expensive since the pandemic in 2020, which increases the cooperative’s costs.
✅ Demand:
This means how much electricity everyone is using at the same time. During cold weather, electric demand goes up because more people are heating their homes. This higher demand also raises costs for the cooperative, which affects your bill.
✅ Pass-Through Cost:
A charge or cost (like higher prices for buying power from other companies) that the co-op pays and then includes in your bill.
What Is the Cost of Debt?
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It’s always been on your bill, but you might notice it more during very hot or cold weather when you’re using more electricity.
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It’s usage-based: if you use more power, you’ll see a higher cost of debt charge.
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It’s recalculated every quarter, so weather and market factors can shift the amount.
Why Does the Cost of Debt Change?
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Your Usage
The more kilowatt hours you use, the higher your bill climbs—cost of debt included. -
Upgrades and Reliability
Part of this cost covers investments in equipment and operational fiber, which help us maintain a strong and connected system. Thanks to these enhancements, you’re less likely to lose power during a storm – especially important with severe storm season right around the corner, -
Rising Costs
Poles, transformers, and other materials have skyrocketed in price in recent years, sometimes more than doubling in price. Events such as the pandemic or economic downturns can be unpredictable, but we can mitigate the risks by proactively investing in materials and equipment.
How Does Weather Affect My Bill?
Extreme temperatures lead to more heating or cooling, which means more electricity usage overall. That spike can mean we need extra power, and the related costs get passed on to you. Think of it like buying extra groceries when company comes over—someone has to foot the bill.
Ways You Can Lower Your Bill
Yes, you’re at the mercy of certain market factors—but you can still control how you use electricity at home. A few small tweaks can lead to big savings:
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Check Your Thermostat
Dial it down (or up) by a couple degrees based on the season. Small adjustments can make a noticeable difference. -
Unplug Devices
Those chargers and devices sipping power in the background add up over time. -
Seal the Gaps
Weather-stripping and insulation help your home stay comfy without cranking up the HVAC. -
Embrace LED Lighting
LED bulbs use less energy and last longer, lowering your overall consumption.
Our Role in the Community
Our cooperative maintains the lines and keeps you connected. That’s our job. We’re here to provide affordable, reliable energy—not to profit off members. When prices go up, it’s usually because the costs we pay for fuel, materials, or infrastructure have increased. We pass those costs on, without padding our pockets.
Bottom Line
Understanding your electric bill doesn’t have to be confusing. The “cost of debt” helps the co-op invest in better service, and it’s closely tied to how much electricity you use—especially during extreme weather. If you notice this charge, remember it’s one reason we can keep your power safe, reliable, and up to date.
Still unsure about a charge on your bill? Give us a call at 501-745-2493. We’re always happy to explain—and we’d rather you feel confident than confused.
(Tip: Stay curious! If something on your bill doesn’t look right, reach out. We want you to understand every part of your electric bill and how it benefits you.)
