Cooperative Rate Increase
Community Electric Cooperative last filed for a general increase in its retail rates in 1991. At that time, the Cooperative’s average cost of a kilowatt-hour sold for residential purposes was slightly more than 8 cents. Over the years which followed, the cost of our average residential kilowatt-hour rose to 10.9 cents in 2011. The increases over this period were driven primarily by fuel related wholesale power cost. If one were to take the 1991 kilowatt-hour cost and escalate it consistent with the changes in the consumer price index (CPI) from 1991-2011, one would find that the CPI had increased at a rate significantly greater than that of the average cost of a residential kilowatt-hour sold by the Cooperative. In fact, if the Cooperative’s average residential kilowatt-hour cost had risen at the same rate as the CPI, in 2011 it would have cost approximately 13.3 cents per kilowatt-hour in lieu of the actual 10.9 cents. This relationship is depicted on this graph.
It is also interesting to compare the increases of other forms of energy over the same period. The average cost of a gallon of gasoline in 1991 was 81 cents. Today, it is not unusual to pay $3.50 per gallon. Propane, used frequently for home heating, has experienced a similar increase since 1991. Compared to other forms of energy, electric service from your Cooperative remains a bargain.
The Cooperative had been able to maintain its rates with only the minimal increases, as indicated on the adjoining graph, through the benefit of its growth in membership and sales, coupled with increased efficiencies. Unfortunately, over the last three years, the Cooperative’s growth in membership has been nil and the impacts of inflationary costs have taken their toll on the Cooperative’s financials.
As the Cooperative’s staff prepared its budget for 2012, it became evident that the Cooperative would have to seek rate relief as soon as practical in order to maintain the reliability and quality of service which the membership has become accustomed. A cost of service study was commissioned and is nearing completion. Based upon the current schedule, we will file an application for an increase in our jurisdictional gross revenues of approximately 6% with the Virginia State Corporation Commission (SCC). The actual increase experienced by Cooperative members may vary based upon usage level and rate classification. These variations are the result of the allocation of the power supply and the Cooperative’s operations’ cost as determined by the cost of service study. After receipt of the Cooperative’s application, the SCC will establish a schedule for consideration of the application and potentially an effective date for the rate increase. Members are encouraged to monitor this web site and the Cooperative’s pages within Cooperative Living magazine for additional details as the Commission gives consideration to the Cooperative’s application.