President’s Reports

President's Report

New Rate Redesign Affects Each Rate Class Differently

Photo portrait of Dave MarkhamAs addressed in the story on page four in this month’s Ruralite, Central Electric is embarking on a historic change to the design of our rates. Often, when CEC adjusted rates, we applied a uniform percentage change across all rate categories, rates and facili­ties charges. The new rate design going into effect this month and first appearing on February’s bills will ensure greater fairness and balance in light of the significant changes confronting our industry driven by renewable energy growth, increasingly unpredictable weather patterns, and growth in energy­ efficiency technologies. The changes vary by rate class and member. For most members, cost increases in some areas are offset by decreases in others. The overall rate design will have no impact on revenues to CEC.

The fundamental purpose of the change allows us to distin­guish how we recover our energy costs from our fixed costs. However, the rate redesign also was adopted to bring greater balance and equity to our cost recovery among the various rate classes. This means each rate category has its own set of changes to its billing. Our article beginning on page four explains why the change was made and how it is structured, but its primary emphasis is on our residential members’ ser­vice. After all, about 87 percent of our membership accounts are residential.

To see details of how the other rate categories are affected, I recommend you visit the News and Information section of our website, www.cec.coop. While every rate class had its energy charges reduced to offset higher facilities charges, each class’s new design has other noteworthy changes. For those other than the residential class, they include:

  • Commercial. This rate class also sees increases to demand charges, which mea­sure peak energy use within a given month.
  • Domestic Irrigation. The facilities charge increase is more significant than for the other categories on a percentage basis due to the highly seasonal nature of this rate class’s annual activity.
  • Agricultural Irrigation. The redesign introduces facilities charges for the first time for this rate category, along with reduced energy charges.
  • Industrial. The facilities charge for these 18 members remains stable because our cost of service analysis determined no change was required.

The rate redesign was developed with the goal of ensuring that each member is billed fairly while at the same time planning for the long ­term financial stability of the co­op. This is particularly important now because of the historic changes the electric utility industry is experiencing.

Respectfully,

Dave Markham
President and Chief Executive Officer