The reason for the capacity charge is to pay the costs of maintenance and overhead of poles and wires so the capacity is available when requested. Larger transformers require heavier infrastructure and heavier infrastructure cost substantially more.
A capacity minimum charge is derived from the size of transformer or transformers a service requires. For services requiring more than 15 kVA of transformer capacity, the capacity minimum monthly charge shall be $1.00 for each additional kVA.
For example, a single phase service with a 25 kVA transformer will have a monthly minimum charge of $25. The base rate is $15.00 and the additional $10 is for the kVA size (25-15=10). If the member uses at least 141 KWH’s a month, there will be no monthly capacity minimum charge because the 141 KWH’s will make up the $10 for the additional 10 kVA (.071/kwh X 141=$10.01). If this was a house with 0 usage the service will be billed the $15.00 base rate plus $10.00 capacity minimum to equal the $25.00 minimum monthly charge.
Typically, a 10 kVA transformer is sufficient for a standard home that does not use electric heat. A home using electricity for heat may need anywhere from 15 to a 25 kVA or more depending on the size of the home and type of heating units. Most residential services will not see any charge for the capacity minimum charge unless the residence is unoccupied or the residence uses less than $10 of kwh a month.