Second Phase of CEC Rate Redesign in Effect
Central Electric Co-op embarked on a five-phase, eight-year transition to a new rate design in January 2017. Each change will first be visible to members in their February bills in 2019, 2021, 2023 and 2025, the first month when when 100 percent of their billed energy use occurred in the year when the latest change took effect.
CEC undertook the rate redesign to ensure all members pay their fair share of the costs of operating the utility. This is being achieved by separating recovery of the costs of operating the utility — through the facilities charge — from recovery of the cost of the energy used by the member 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 fixed cost recovery will continue to be through the collection of the energy charges until the rate redesign is complete in 2025. At that point, the redesign will have achieved a complete separation of cost recovery, 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 membership remains unchanged. However, due to differences in individuals’ energy use levels some members may see slightly lower bills, others may see slight increases, and most others won’t see any substantial 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 is being undertaken in five stages, occurring in February 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 strictly to changes in the amount of electricity they use.
At the time each phase is implemented, every rate class’s energy charges will be reduced to offset higher facilities charges, with each class’s new design including changes specific to that class. Rate-class-by-rate-class details are available here: