Rate Increase Effective with November Billings

As reported in the October Ruralite, in anticipation of the Bonneville Power Administration’s region-wide rate increase of 5.4 percent to its wholesale power rates this fall, Wasco Electric Cooperative (WEC) started a rate review process late last year with a consulting firm conducting a cost of service analysis. The goals of this study were to create a rate structure that fairly allocated costs among the different rate classifications to eliminate particular classifications from subsidizing the other rate classes, as well as separate the fixed costs (delivery charge) of the cooperative from the variable energy costs (kilowatt-hours).

After several months of reviewing different rate options, in August the board of directors adopted a new rate structure with an eight year phase-in to get to the true cost of service and create cost equalization among the different rate classifications.

The first year of this new rate structure will result in an overall increase in revenue from rates of 3.2 percent. The actual increase in rates among the different rate classifications will vary from no increase to a 7.67 percent increase, depending on that classifications current contribution to the overall financial needs of the cooperative.

Questions regarding the Delivery Charge and Implementation of the new rate structure:

Q: What is the Delivery Charge and why am I billed for it?

A: The Delivery Charge is designed to recover fixed costs of the co-op necessary to serve the member independent of the energy (kWh) usage. WEC needs to recover these fixed costs even if a member uses 0 KWh. These are costs associated with owning and maintaining poles, wires, transformers, meters, vehicles, equipment, materials, buildings, billing system and the crews and employees who keep the system working each and every day.

Here’s an easy analogy to help understand the Delivery Charge: Think of the Delivery Charge as a car in the garage. Most people have a car payment and the payment you make is a set amount every month. You would pay this amount monthly, regardless of whether you took the car out for a drive or not. This payment is the same as the Delivery Charge. The fuel that you use to drive the car can be compared to the electricity (kilowatt-hours) that a home uses each month. You can control how much you drive a car, but regardless if you drive it across country or just around the block, you still have to make the payment for the cost of owning the car. Having a car and driving a car are two separate costs; the car itself (Delivery Charge) and the gas to drive it (kWh/electric consumption)

Q: What is the plan for implementing the new rate structure?

A:The board of directors adopted an eight year phase-in with projected annual increases beginning this November to get to the true cost of service model where the fixed costs are separated from the variable kilowatt-hour costs. By the time the plan is fully implemented in 2024, the projected monthly Delivery Charge will be $49 for residential and low-use, $59 for general services and $75 for large general services.

Below is a look at how the new rate compares to the existing rate

The overall increase in revenue from rates averages 3.2 percent. The average increase by rate classification is based on the annual average use per month. However, due to differences in individuals’ energy use levels within their appropriate rate classification, some members may see higher percentage increases, and some may see lower increases.

How will this increase impact your bill?

As a residential consumer, if you used 1,400 kilowatt-hours of electricity during the month, your bill under the current residential rate schedule would be $145.89. Under the new rates effective November 2017, the same 1,400 kWh will cost you $152.66, or an increase of $6.77.