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Rate Redesign Enters Final Phase
Central Electric Cooperative’s (CEC) fifth and final phase of its gradual rate redesign is effective January 1. On February bills, residential members will see a $4.4 increase in their facilities’ charges, while the energy charge remains unchanged. Other rate classes are affected differently.
The rate redesign, which sought to address an imbalance in the rate structure dating back to the co-op’s early existence, was implemented in phases every odd year beginning in 2017.
The utility industry historically blended all costs into a customer’s energy use, lumping a utility’s fixed expenses, such as operations, inventory, maintenance, repair, and administration overhead, with the kilowatt-hour charge.
This approach created an inaccurate perception among members that the co-op’s services were defined solely by how much electricity they used. While a utility’s expense to buy energy for its members fluctuates based on weather and the energy markets, its fixed costs remain constant.
Over time, the practice proved untenable. CEC began to address the issue in 1978, adding a customer charge—later named the facilities charge—to stabilize revenues, starting with gradual increases. The facilities charges did not keep pace as CEC’s fixed costs significantly exceeded revenues, putting the co-op’s rates out of balance.
In 2016, CEC created a rate design advisory committee, comprised of volunteer co-op members representing all customer classes, to devise a solution to balance energy and facilities charges equitably.
The board of directors adopted its recommendation, bringing more fairness and balance among the different rates, with members paying for their energy use and equitable share in operating the utility.
In Phases I through IV, residential members saw a minimal decrease in their kilowatt-hour energy charge to offset the slight increase in their monthly facilities charge. The ongoing inflationary pressures on electrical equipment driving up the costs for CEC’s strategic investment initiative and the rising costs of power have made implementing a minimal rate decrease financially unfeasible.
For years, the co-op has successfully kept its residential rates low—well below Oregon and the nation’s averages—while prices for residential electricity, according to the U.S. Bureau of Labor Statistics, have jumped 25% nationwide from June 2021 through June 2024. There is every indication the upward trend will continue.
Bonneville Power Administration—the supplier of nearly all CEC’s wholesale electricity— has signaled an approximate 19% increase in power costs for the upcoming 3-year rate period from October 1, 2025, through September 30, 2028. As a result, CEC will likely need to make rate changes later next year and in the subsequent years to absorb BPA’s cost increases.
CEC will continue to navigate these oncoming currents and keep members informed of ongoing developments while effectively managing costs within its control without compromising the safety and reliability of the electricity it delivers.
President and CEO Brad Wilson