As I wrote last month, our rates will be going up on April 1, 2016. At the November Board meeting the Board approved an overall increase of 9.31% for non-industrial members. The increase will range from 10.48% for single phase customers to 7.3% for large power members requiring power between 200 to 5000 kilowatts. Including industrial members whose loads exceed 5000 kilowatts, the overall increase drops to 7.9%, with industrials receiving a 4.5% increase.
COST OF SERVICE STUDY
You are probably wondering why there is such a large spread in increase between the different types of members. It is a result of the “Cost of Service Study” or COS. The COS is a detailed analysis of what it costs to provide electric service to different types of members, based on their load characteristics. One significant difference between industrial members and non-industrial members is the amount of plant required to provide service to them. By plant, I am referring to the poles, wire, transformers and other equipment required to meet your electric needs. We have over $74,000,000 in plant to serve our 9000 non-industrial members, where we have less than a million dollars in plant to serve our industrial members. Industrial members also pay for 100% of the plant we use to serve them, so we don’t incur any interest expenses on it. Our industrial members are served directly from Northeast Power’s transmission network, so the amount of maintenance is small in comparison to the maintenance of the 74 million dollars of plant for the non-industrial members.
Even between the different
non-industrial members there are different costs to serve. Once again, the difference in the cost to serve single phase, and commercial and large power members, is driven by the amount of plant required to serve different classes of members. Where the three phase network is allocated to all of the non-industrial class of members, all of the costs associated with the operating and maintenance of the single phase lines are paid for by our single phase accounts. Sixty six percent of our lines are single phase, so you can quickly understand why our single phase rates are higher than the other rate classes. Our goal in setting rates is to recover the cost of operating the cooperative and to avoid one class of members subsidizing another. We will continue to share information on the rate increase with you in the coming months.
Not only is this the last edition of HighLine Headlines, as we will start using Living with Energy in Iowa to keep you up to date on the happenings at Access Energy Cooperative, but this is also my last article with the cooperative. I am retiring at the end of December. I want to thank everyone for the support they have provided over my career. I have been blessed to have worked with people who are dedicated to doing their best to serve you, our members. I will always be thankful to Don Atwood, Max Hollander, Lynn Johnson, Jim Beckman, Loren Reif, Ralph Ruby, Frank Hasenclever, Dwight Krebill and Adrian Overberg, the Board of Directors that was willing to take a chance on a young engineer from Missouri to manage the cooperative. I ask that you give my successor, Kevin Wheeler, the same support you have given me over my time with the cooperative.