Membership Matters by CEO Brian Zelenak: August 2019
Daily Fixed Charge to increase from 93¢ to $1.15 with August usage on September bills
By Brian R. Zelenak
Effective on September bills, St. Croix Electric Cooperative (SCEC) will increase the Daily Fixecd Charge on residential/agriculture accounts from $0.93 to $1.15 per day. Base charges on all other rates, energy charges and demand charges will remain until the independent consultant retained completes the Cost-of-Service Study (COSS) currently underway.
The last rate changes were made six years ago in 2014 based on the 2013 COSS. The change reflects a 5% increase since 2014, while general cost increases have increased more than 8.5% during that time. During that time, wholesale energy prices – which accounts for almost 70% of our costs - have also risen 7%. SCEC’s daily operations are not immune from cost increases and keeping our rate increase to less than the general costs increases shows how hard we work at keeping costs down. We are paying more for material, products and services, and we came to the point we needed to pass some of these costs increases onto our members. In addition to general cost increases, sales growth has generally been declining.
The 2013 Cost-Service Study revealed that the cost to serve a residential/agricultural account was approximately $40 per month. The increase will bring the $28.29 we were collecting per month up to $35 per month – closer to what the cost was calculated to be six years ago.
As can be seen from a comparison to other area energy providers, SCEC remains one of the lowest in Western Wisconsin even after the increase. We are proud that we continue to provide safe, reliable service at very competitive prices. Once the COSS is completed, we will review the results to see if other adjustments are needed.
This change was an intermediate step that provides additional financial stability for the cooperative by charging a rate closer to actual costs until the comprehensive COSS can be completed. Increasing the Daily Fixed Charge also helps stabilize the financials of the cooperative by decreasing the reliance on weather driven sales – which are becoming harder and harder to accurately forecast.
As a not-for-profit, SCEC must recover the cost of doing business and well as maintain sufficient margins to reinvest in the electric distribution system. Having a more stable revenue stream that is more in-line with today’s costs helps SCEC plan the growth and enhancements in the safe and reliable electrical system our members have come to rely upon to fuel their homes and businesses.