Rate Proposal Passes-Effective with March Usage
On December 15, 2015, a rate proposal was presented to the Board of Trustees of the Wheatland Electric Cooperative, Inc. The study was completed by Mike Searcy of C. H. Guernsey & Associates. As announced in the November issue, the December board meeting was open to all members during the section of the meeting when the rate proposal was discussed and voted upon.
During the presentation, Searcy demonstrated the rates of all classes of service and how rate changes were applied to the various classes. Searcy showed how combining the rates from Wheatland’s east and west service into one rate structure will allow for more efficiencies and potential cost savings in the future. The Board, staff and members in attendance asked Searcy numerous questions about the proposed rate structures. Members also asked cooperative staff how the proposed rate structure would be implemented.
After all questions were answered, the Board of Trustees discussed the matter thoroughly and decided it was in the best interest of the cooperative and its members to adopt the rate proposal. The rates will go into effect March 1, 2016.
Cost of Doing Business
The cost-of-service study showed that the overall electric revenues must be increased by 7 percent. This increase is needed to cover increased expenses for building and maintenance of the electric distribution infrastructure, wages, benefits and the overall cost of doing business.
The study also showed that some of the rate classes needed adjustments to more accurately cover their contribution toward the cost of providing electric service.
Service Availability Charge
One part of the rate change is the Service Availability Charge (formerly known as the Customer Charge). This monthly fixed charge is designed to recover the fixed costs of providing the equipment, materials, labor and business overhead necessary to serve each meter regardless of the amount of electricity consumed. These costs are the same for a member using 10 kilowatt-hours (kWh) or 5,000 kWh.
Power Cost Adjustment
The cooperative’s average cost of wholesale power varies monthly depending on both the demand charges and fuel charges from our wholesale power suppliers Sunflower and Mid-Kansas.
The cooperative uses a Power Cost Adjustment (PCA) to pass along these fluctuations in wholesale costs. The PCA appears on your bill as a separate line item as a charge or credit applied to your monthly energy use based on the difference between the cooperative’s actual monthly cost of power and the anticipated (or levelized) base cost of power.
Over the past few years, the PCA has been a charge and not a credit to the members each month. The PCA has been a charge, because the base charge was anticipated several years ago, and power costs have increased since then. As part of the rate change, the board agreed to change the anticipated (levelized) base cost of power so that the PCA would be zero if the anticipated and actual costs were the same. As a result, you will likely notice a decrease in PCA charges.
Contact us with Questions
Please refer to the charts in the January issue of the Kansas Country Living Magazine that demonstrate the existing rates and the new rates that will go into effect on March 1, 2016.
As we have expressed before in earlier articles, increasing electric rates is a matter of paramount importance. The cooperative’s Board and management have evaluated this issue for some time and decided the increase was necessary for the responsible operation of the cooperative—both for the quality and reliability of service and the financial integrity of the cooperative.
Please feel free to contact your local Wheatland Electric office with any questions, concerns or suggestions you may have.