Message from CEO Mark Rollans: General Service Rate Change Effective April 1
Looking out for members is essential to the success of the cooperative, since Medina Electric members own the cooperative. Every member has a real stake in the financial future of the cooperative.
Rate changes, especially increases, are not something that people enjoy reading about. Pleasant or not, I've always viewed this as a space for me to let members know the what's and why's of what is happening at the co-op.
As of April 1, the customer charge for the general service and seasonal rate classes will go from $27.50 to $29. That is the what. Now, here's the why.
About every two years, the cooperative has a cost of service study performed where an unbiased outside firm who specializes in designing electric rates reviews the cooperative's financials. They then break down the costs of providing service to each rate class, since each group has unique characteristics that impact costs, and make rate recommendations. Basically, the study shows if each rate class is paying enough to cover the costs associated with bringing electricity to them.
The most recent cost of service study, completed in spring 2016, revealed changes needed to be made to the customer charge for the general service and seasonal rate classes. It was determined that this $1.50 increase was the most fair and appropriate option.
The customer charge covers fixed costs. These costs are incurred for every meter, regardless of the amount of electricity used. As a cooperative, there are costs we must pay whether or not a single kilowatt-hour of electricity is sold. If you think about it, the customer charge is what you pay for the convenience of having electricity available when you want it.
Things like poles, wires, line equipment and a meter must be in place so that you have electricity when you flip your light switch on, whether you use 50 kWh or 2,500 kWh a month. Repair and maintenance, depreciation, property taxes—did you know we pay property taxes on poles and equipment along the 9,400 miles of line we own—, pole inspections and tree trimming are examples of other fixed expenses.
Rate changes are not an easy decision for the board to make, and we realize that no increase in cost is easy for our members. No one likes rate increases: Members don't. Cooperative staff doesn't. Board members don't.
As a not-for-profit electric cooperative, we have to ensure rates are covering the costs to serve each rate class. The cost of service study revealed that is not the case, and it would be financially irresponsible for our board not to take action. As a cooperative member, you have the assurance that rates increase when the true cost of serving your home or business increases, and never to generate profits for shareholders.
Delivering reliable electricity is a capital and labor intensive business. It requires a lot of equipment, technology and people to have electricity available when you need it, and there is a cost associated with those things.
I hope that members can understand the necessity of the rate change. To put it in perspective, you will still be paying less than a dollar a day for the customer charge. That's less than a dollar a day for the convenience of having electricity available. That is much less than we pay for many other modern conveniences.
I encourage you to contact our office staff or visit MedinaEC.org/RateChange for additional questions or concerns, and also watch the March issue of Texas Co-op Power where we will again cover details on this rate change.
Until next time,