Rate Notice, July 1, 2020
Central Rural Electric Cooperative annually reviews its rates and total cost of service which recently indicated the need for a rate standardization for residential and small commercial rate classes. Central’s rates are structured on the premise of the cooperative to recover fixed costs such as power lines, substations, equipment, right-of-way maintenance, operational costs and more.
Not only does the cost of service analysis review the cost of purchased power, but it also highlights energy consumption trends. Historical trends reveal that residential energy consumption increased an average of 2.5% per year from 1992-2008, however, the trend stopped in 2009 and has been flatline since.
With flatline growth, Central has begun looking at ways to stabilize income as well. One of the ways to do this is through a constant rate structure. Prior to July 1, 2020, Central’s residential rate contains a summer and winter component with different charges for the year.
In an effort to stabilize and simplify rates, the winter energy discount for rate classes 1, 4 and E4 will be removed. Currently, members enjoy a half cent discount per kWh during winter months (November-March). The removal of this discount will create one rate for the entire year, which will remain at $00.081 per kWh.
The effect on a member’s electric bill will vary based on a member’s energy consumption. The average member who uses 1,435 kWh per month will see an annual average increase of $3.00 per month on the electric bill.
Below is an example of the impact the removal of the winter rate discount will have for a member.
While the rate goes into effect on July 1, members’ bills will not be impacted until November 2020.
The current winter rate discount is a half cent per kWh for electricity used during the months of November-March, see below. The new rate will remove the winter discount and maintain a consistent rate for the entire year at $00.081, which is the current summer rate (April-October). As energy consumption flattens, the winter discount makes less financial sense.
CURRENT RESIDENTIAL MONTHLY RATE:
Service Availability Fee: $27.00 per month
Summer (Usage from April through October)
All kWh per month @ $00.081000
Winter (Usage November through March)
All kWh per month @ $00.076000
This rate adjustment will help stabilize annual cash flow and recovery of fixed costs, which is important because we are a not-for-profit electric cooperative. All margins (profits) we receive are invested back into the electric system or allocated to you, our members, in the form of capital credits.
The cost per kWh consumed during a billing period. The removal of the winter rate discount will increase the charge a half cent from $00.076 to $00.081, only for five months of the year (November-March).
Central members’ use is changing, due in part to an increasing number of electrical devices, energy efficiency efforts, use of alternative energy and other lifestyle trends. These variables create big differences in electric use from one neighbor to the next. Some members are using well below the average kWh consumption while others are consuming significantly more. To continue to provide all members with quality, safe, affordable service, we will continue to adjust the service availability fee and evaluate rates to make them both fair and equitable to all members. Know that all adjustments will be implemented with the goal of having a minimal effect on our members and only after all efforts have been made internally to reduce costs.
Central offers many options to help members manage their electricity bill. We offer online and automatic payment options, prepaid billing and budget billing.