When you receive your electric, natural gas or water bill, you may notice line items or explanations of the various other charges outside of the typical service costs. These charges, which are known as riders, have a variety of names, purposes and rules. Let’s break down what a rider is and why utilities use them. 

What is a rider? 

A rider is a utility charge, not included in standard rates, that allows a utility to recover the costs of specific programs.  The PUCO and utilities are authorized by statute to create and approve riders with limitations based on the industry. For example, Ohio Revised Code 4929.161 authorizes natural gas companies to create an infrastructure development rider that covers the cost of certain economic development projects. The utility may spend that money under the guidelines of the rider and then collect the costs of the program spread across its customers. 

 Duke Energy example electric bill with rider included 

Riders can have spending limits known as caps. For example, a vegetation management rider may be approved by the Commission to recover only up to $10 million in costs annually. Should the utility spend more, any cost above the $10 million will not be charged to customers. Riders can also be credits to consumers, when they’re designed to return money or credit an overcollection.  

Each rider may have unique limits or cost recovery mechanisms and may be listed as line-item charges or embedded as part of the distribution service charge.  The easiest way to see what riders you are being charged for is to look at your bill explanation page, visit your utility’s website or check any regulated company’s tariff here on the PUCO website. 

Why include riders at all? Why aren’t these costs typically included in base rates? 

Base rates are calculated on the costs of a typical year; riders can address specific costs that are outside of the utility’s control. For example, riders can cover the costs of repairing unexpected major storm damage which may only occur once every several years. In base rates those costs which would be recovered annually on a long-term basis; whereas with riders, customers would only pay those extraordinary costs when they occur. In that way, riders are not considered additional charges on top of base rates, but more specific ones. 

Additionally, base rates are not audited on an annual basis and are not subject to reconciliation like riders are. Riders also help insulate consumers from larger price increases by adjusting costs on a more regular basis rather than a larger adjustment after several years at the same rate.  

How are riders monitored? Are they permanently added to my bill? 

Riders are reviewed periodically by PUCO staff, usually on an annual basis. Depending on how a rider is set up, that may mean quarterly, annual or semi-annual filings are required by the utility. The riders may also be required to be adjusted on a regular basis as costs increase or decrease.  

Once approved, a rider cannot be removed without going through the appropriate process. Some riders may be initially set up to be approved only for a limited time or purpose; after that, they would be removed or have the rate set to zero.  

The Ohio Utility Rate Survey is a great way to view the impact of current riders on average electric or natural gas bills. The bill components tab displays the charge types, effective dates, current costs and links to their corresponding documents in the Docketing Information System.  

As always, any questions or concerns about your utility bill can be brought to the PUCO Consumer Call Center.