New electricity rates effective July 1
The board of directors approved a rate increase at its May meeting to help cover the rising costs of delivering power. "While no one likes to see this, it is something that can’t be avoided," said General Manager Bill Schmidt. "I hope the following information provides insight about our decision."
How will electricity rates change?
Members will see an increase on the monthly basic electric charge, their kWh energy charge and security light fees. No changes will be made to the off-peak meter charge, and here’s some good news – the monthly power-cost adjustment will be removed.
Why is a rate increase necessary?
Costs beyond the co-op’s control to produce and deliver electricity are rising. Wholesale power costs from Dairyland Power Cooperative, our power supplier, increased 5% in May 2010; this follows a 10% increase last year.
The increase in the cost to purchase power and the drivers of rising costs – mainly renewable energy and environmental regulations – were first announced to members in the February Powerlines.
Dairyland Power is expanding its renewable generation to meet the state’s mandate of 10% by 2015, as well as its transmission infrastructure to deliver the renewable energy. In addition, Dairyland is investing in energy efficiency and conservation programs that are good for the environment and will help meet regulatory requirements. Dairyland is also in the midst of a $400-million plan to meet new state and federal clean air laws, with emission-control equipment at coal-fired power plants to remove sulphur dioxide, mercury and nitrogen oxide. These efforts increase the overall cost to provide co-op members with electricity.
The economy is also making an impact on co-op business. Foreclosures, vacant homes and properties, and lower kWh sales and market prices for electricity result in higher rates for all energy consumers.
What is the co-op doing to hold down costs?
Like our members, Polk-Burnett is always searching for ways to tighten its belt. We’ve reduced our workforce and the use of independent contractors this year, and we continue to look at every phase of our operation to control costs and improve efficiency.
What is the basic electric charge and why is it so high?
Every wire, cable, transformer, pole and meter costs money. All this equipment is needed to bring electricity to your home, farm, business or cabin, regardless of how much (or little) electricity you use. The basic electric charge ($34/month) fairly distributes these fixed charges among all members each month. If these fixed charges were embedded in the kWh energy charge, 1) those who use a lot of electricity would end up paying the majority of the costs for other members’ electrical facilities, and 2) the co-op would have difficulty recovering the revenue it needs to operate because people are using less energy due to efficiency and conservation efforts. In addition, unseasonable weather the past few years has lowered electricity use. The board’s philosophy is to recover a greater share of fixed costs through the monthly basic electric charge.
When can members expect the next increase?
The board’s objective is moving toward smaller, more frequent rate increases, rather than waiting until larger increases are needed. The July 2010 rate increase is anticipated to meet the co-op’s financial needs through May 2011. However, unplanned events such as storms or power costs from Dairyland can affect rates at any time. For example, if the price to purchase power rises above a 5% increase this year, the co-op may have to pass another power-cost adjustment on to members. We will share rate information with members in the Powerlines and Connections newsletters.
What is the co-op doing to help members manage their bills?
Polk-Burnett offers many opportunities to help members manage their power bills:
• Find energy calculators, energy audits, money-saving tips and more on our EnergySavers page
• Identify and control energy use with energy assessments and Kill-a-Watt meters
• Conserve and save with rebates from Polk-Burnett’s EnergySense and Focus on Energy
• Conserve and save with 101 Low-Cost, No-Cost Energy Saving Tips
• Learn how little changes add up to big savings with how-to videos, energy calculators and online audits at TogetherWeSave.com
This rate schedule still includes separate rates for winter and summer, with higher rates in the summer months when demand is higher. The wholesale power costs Polk-Burnett is charged by its electricity supplier, Dairyland Power Cooperative, are calculated based upon how Polk-Burnett members use electricity. Our members use more electricity during the hottest days of summer than they do on the coldest days of the winter. As a result, Dairyland charges us more during the summer than in the winter and that is why Polk-Burnett is charging different kilowatt-hour charges for winter and summer. Winter rates will be billed November through April and summer rates will be billed May through October.
As for the future of electric energy rates, the cooperative believes they will continue to rise. Again, the main reasons for this are the continuing lack of adequate generation and transmission equipment, plus the pressures of environmental regulations that will continue to result in substantial rising costs to comply with those various laws.
As a non-profit electric cooperative, Polk-Burnett charges only what it costs to keep the lights on for members and maintain a responsible financial position; rates are not marked up to generate profit. We still need to operate as a business and have certain financial requirements we must meet. The directors and employees of Polk-Burnett watch expenses carefully and are committed to providing electricity at the lowest possible cost.
The co-op's last rate increases were in September of 2006 and October of 2008.
