Fixed charges, also known as customer charges, are the flat monthly fees that every customer pays on their electricity bill, regardless of the amount of electricity consumed. These charges are designed to recover the basic cost of electric service, independent of how much energy is used. Fixed charges are used to cover the costs of building and maintaining the distribution system, delivering electricity, and other costs that do not change based on the amount of energy used.

Utilities prefer to collect revenue through fixed charges because they reduce the utilitys risk that lower sales (from energy efficiency, distributed generation, weather, or economic downturns) will reduce its revenues. However, higher fixed charges are an inequitable and inefficient means to address utility concerns. Fixed charges reduce customer control, as the only way to avoid the charge is to stop being a utility customer. Customers who use less energy than average will experience the greatest percentage jump in their electric bills when the fixed charge is raised, since bills are based less on usage and more on a flat-fee structure.