System Benefits Charges
System Benefits Charges (SBCs), also known as public benefit funds, are fees placed on electricity bills. Almost every state that has passed electric industry restructuring legislation has used a system benefit charge to support renewable energy, energy efficiency, low-income customer programs, energy R&D, or other functions that the competitive market is unlikely to provide on its own. System Benefits Charges are designed to be competitively neutral and, consequently, usually are non-by-passable. That is, every customer pays the charge regardless of what provider sells them electricity. System Benefits Charges also are designed not to competitively disadvantage the entity charged with collecting the fee. SBCs are usually assessed as a fee per kilowatt-hour (kWh), but they also may be assessed as a flat fee per customer.
System Benefits Charges accumulate in a fund. States use different mechanisms to administer the funds.
System Benefits Charges vary in their impact on customers' electric rates, but most are in the range of $0.05 to $0.03 per kWh.
Arguments for the Charge
Some programs, such as assistance to low-income consumers and demand-side management are threatened under competition. SBCs allow these programs to continue while keeping the support mechanism competitively neutral.
An SBC to support renewable energy is a very small part of the total electric bill.
An SBC is a flexible way to allocate funds to areas that the legislature deems important.
Arguments against the Charge
An SBC increases electric bills at a time when restructuring legislation is meant to decrease those bills.
An SBC creates a new administrative function.
An SBC subsidizes selected technologies.
For more information on states with system benefits charges, visit the Database of State Incentives for Renewable Energy (DSIRE).