New CEC Rate Design in Effect
Central Electric Co-op embarked on a five-step, eight-year transition to a new rate design in January 2017. The change will first be visible to members in their February bills when 100 percent of their billed energy use occurred in 2017.
The change was undertaken in order to ensure all members pay their fair share of the costs of operating the utility by separating the costs of operating the utility recovered through the facilities charge, from the cost of the energy used by the member recovered through the kilowatt-hour charge.
The rate redesign separates the recovery of fixed costs from energy cost recovery. Fixed costs remain consistent month to month and include such expenses as vehicles, equipment, and materials; maintenance of and additions to the electricity distribution and transmission system; crews and other employees; and property management and building costs. Energy costs fluctuate monthly depending on consumers’ use, driven by such factors as weather, temperatures and personal behaviors. CEC’s facilities charges, like the rest of the electric utility industry, recover a portion of the fixed costs. But some are also recovered through energy charges. The redesign will create a complete separation, known as rate decoupling.
“The new rate design will give members a clear presentation of what it costs to run the utility and how changes in the cost of energy affect them,” said Dave Markham, CEC president and CEO, when the new rate design was announced. “It is a revenue-neutral change to the co-op, meaning the amount of money paid by the total membership remains the same. However, due to differences in individuals’ energy use levels some members may see slightly lower bills, others may see slight increases, and many others won’t see any change to their bill’s bottom line.”
Members can view the co-op’s Frequently Asked Questions for more background on the redesign.
The redesign will be implemented in five steps, occurring every other year from 2017 to 2025. When the redesign is fully implemented, all co-op members will be paying their fair portion of the costs of running the utility and any fluctuations in their bill will be due to changes in the amount of electricity they use.
Every rate class’s energy charges will be reduced to offset higher facilities charges, and each class’s new design includes changes specific to that class. Rate-class-by-rate-class details are available here.