Rate adjustment takes effect in March
Beginning in March, members will see a rate adjustment on their bill to the service availability charge. Rural Electric Cooperative’s Board of Trustees approved an adjustment in the charges affecting prices for the electric service REC members receive to help recover more of the fixed cost charges.
The actual rate per kilowatt hour for our residential members is not increasing, just the monthly service availability charge. This charge was previously called the customer charge and recently changed to service availability charge in January. However, in March, the service availability charge will increase from $14.00 a month to $17.00.
A recent cost of service study conducted by C.H. Guernsey determined the service availability charge should be $46.41 a month, but currently we are only collecting $14.00. Almost all of REC’s operating costs are fixed. Whether the member uses one kilowatt hour per month or 1,000 kWhs, the same amount of infrastructure and materials are needed to provide electricity.
REC has provided an excellent energy value to our members over an extended period of time, as REC members have not had a rate increase since February of 2011. Our service availability charge is the fourth lowest in the state, and even with the three dollar increase we will be the eleventh lowest if the other co-ops in the state do not change their rates. However, after listening to the other managers, all the co-ops are thinking about rates and looking at ways to recover more of their fixed costs.
The service availability charge helps recover the cost of providing and maintaining items such as meters, meter loops and transformers. REC provides these items at no cost to our members but recoups the investment and maintenance through this charge. These fixed costs have only continued to increase and the costs to provide service have as well.
Maintaining dependable service at the most affordable price possible remains the cornerstone of our business. To accomplish this goal, we must protect the integrity and financial stability of our organization.
Our members should know when our Board of Trustees meet, they are always thinking about how any change is going to impact our member-consumers. With this in mind, they know the value our members place on energy extends beyond just price. It is the right combination of price, quality of service, reliability and being a responsible partner in meeting the needs of our members today and in the future.
Beginning in March, there will be a three dollar increase in the service availability charge and then a slight increase for the next two years, to help bridge the gap of what is needed to combat the rising fixed costs.
While we know costs will continue to increase, we will continue to work as conservatively as possible to keep our rates low.