There's a fixed cost and another cost that scales with usage. For instance, the California E-1 rate (non-time-of-use) is about 42 cents per kwh. Of that, 25 cents is transmission (long distance lines) and distribution (local lines), and 17 goes toward generation (if someone switches to another electricity provider, it's this 17 cents that would go to that other provider.

Scaling the cost of the grid with usage serves as a price signal for people to conserve power, as opposed to it being jumbled behind a more comprehensive tax or a larger flat fee.