2018 Rate Schedules-Effective March 1, 2018
Schedule A: General Service - Single-Phase
Schedule B: Small Commercial - Single-Phase
Schedule C: General Service - Three-Phase Rate
Schedule LP-1: Over 50 kVA
Schedule LP-2: Industrial Dedicated Substation
Schedule LP-3: Industrial High Load Factor
Schedule L: Private Outdoor Lighting
Schedule P: Utility Power Pack Rate
When was the last rate change?
The last EECA rate change was in early 2018. The way our rates are changed is variant on the type of service and overall usage. The variations of changes for residential, and all other rates, are a direct result of the energy rates being recalculated from the wholesale provider and distributed equally across the different rate classes based on the required services, equipment and infrastructures needed. See above to view the current rates.
Why is EECA’s service availability charge higher than an IOU?
EECA serves on average 7.5 members per mile of line, whereas investor owned utilities (IOU), such as Ameren, serve on average 35+ members per mile. Additionally, EECA’s sales are 89% residential, whereas, the IOU receives a much higher portion of their sales from commercial and industrial customers in more concentrated areas. All of this means that the IOU receive 5 times more revenue per mile of line than EECA does, and therefore IOUs are much better positioned to spread their fixed costs. EECA is at a significant disadvantage due to the rural nature of its service area.
For many years, our cost of service studies has shown that we’ve been significantly under collecting on the flat monthly service availability charge. These studies have indicated that the actual cost of having service available in our rural area should be even higher yet. Although, when comparing bills, all line items, factors and charges must be considered to make accurate comparisons.
How do EECA’s residential rates compare to other Coops in Illinois?
The Illinois Electric Cooperatives Association publishes a residential rate comparison annually so that Illinois Cooperatives can see where they compare to other Illinois Cooperatives. In 2018, Egyptian Electric Cooperative had the fourth lowest overall rates of all Illinois Electric Cooperatives.
Non-controllable vs. Controllable expenses:
Controllable expenses include: Distribution operations and maintenance, customer accounting and collection, administrative, and member services. These costs, or Egyptian Electric costs, accounted for only 20% of our total expenses in 2017. We regularly review our expenses and strive to do more for less, but there are many economic challenges of being a rural utility service provider that city and town utility providers don’t have.
Non-Controllable expenses include: Wholesale power costs, depreciation, taxes and interest. The wholesale cost of power from Southern Illinois Power Cooperative (SIPC) is a major non-controllable expense, that made up 70% of our total expenses in 2017. For residential bills, wholesale costs account for more than two-thirds of the bill, yet for large power services, wholesale power can account for as much as 98% of the billed amount. However, SIPC’s focus is clear — deliver electricity at the lowest cost possible now and into the future. Depreciation, taxes, and interest are largely outside of our influence. These costs accounted for 10% of our total expenses in 2017. However, recently we have been able to curtail some of these costs. For example, EECA has streamlined internal operations into a single building, as well as various additional rate discounts on our current loan portfolio.
What causes costs to go up for EECA?
For Egyptian Electric yearly costs in 2017, we invested $4 -$5 million in operations and maintenance to our electric system. That, plus what we pay for poles, wire, transformers, vehicles, etc., tend to increase and impact our electric rates. These costs simply cannot be recovered only through the kWh energy charge because there are too many variances such as weather, which can negatively impact the Cooperative financially. EECA currently owns and maintains 1,679 miles of overhead line and 306 miles of underground line, being a total of 1,985 miles. Again, 80% of our costs are non-controllable.
What is EECA doing to control costs?
Purchasing – EECA is in the beginning stages of implementing a competitive bid process for the purchasing and ordering of materials. The bid process is already being used for contracting out right-of-way management, utility contracting crews, and large project line up-grades.
Information technology – Egyptian Electric has implemented paperless functions, such as service orders, which not only saves in materials, but in employee time and energies. We’re driving more members to the web to pay through e-bill and SmartHub. We are promoting member engagement with social media, our website and SmartHub, opposed to investing in costs such as bill stuffers. These measures help reduce labor, printing, and postage costs.
Ways to Pay – We encourage members to use automatic bank draft and recurring payment methods to cut down on labor costs. We have three payments kiosks, and have initiated a 24/7 automated phone system for members to make payments with extended hours, for convenience to the membership.
Write-offs – EECA has been able to significantly reduce member account write-offs over the last several years. For example, write-offs were approximately $79,000 in 2010, to about 1/3 of that amount, approximately $26,000 in 2017.
Automated Meter Reading – is the technology of automatically collecting energy consumption, and transferring the data for billing, troubleshooting, and analyzing. This technology saves us the expenses of periodic trips to each physical location to read your meter. Along with this, we also utilize remote meters that can connect and disconnect a meter with a click from our office.
Personnel- We have maintained the same number of employees, if not less, over the last several years, even though it had become apparent to add additional variations of full-time employees to the EECA head-count. For instance, in 2016 we hired an Informational Technology (IT) Manager to meet the challenges and changes of technology used in EECA’s business practices, prevent cyber security attacks through employee training, along with software and hardware reinforcement. Our IT Manager is an asset to our organization and membership. We now having the ability to run software and systems in house opposed to contracting costly services. Safety and security will continue to be a priority, as we continue to advance member facilities and network. With that said, we will most likely be losing 2/3 of our work force in the next 5-10 years, therefore additional employees will be hired for future succession planning.
Is EECA’s new headquarters building, is this the real reason I see an increase in my bill?
From the beginning it has been said that our new building could potentially have little to no impact, or an equivalent of up to a 1% increase, to the membership. A new building is a long-term asset that provides efficiencies and cost savings in itself. There are also tax savings offered as being a part of Jackson County’s Enterprise Zone, and USDA REAP grant money received in energy incentives, aside from other savings of being in one primary location.
Instead of continuing to refund capital credits to active and inactive Members, why not use those funds in place of a rate increase?
By law, an electric cooperative must allocate patronage capital, or capital credits. Capital credits are allocated to each member of the Cooperative every year based on participation in the Cooperative. This is a primary difference between a for-profit investor-owned company and a cooperative. It is what happens to revenue above and beyond annual operating expenses. An investor-owned (for-profit) company disperses excess revenue (dividends) to its investors. A cooperative, on the other hand, distributes excess revenue to its members in proportion to their contribution of the revenue. The more you contribute to the revenue through your electric purchases, the more that’s returned to you when there is excess revenue. Refunding patronage capital does not affect our margins (but does impact our balance sheet). Part of the premise of a coopera¬tive is having members as investors, and giving members a return on equity over time. Active and inactive members who have been on our lines for many years paid patronage capital and deserve a return on those investments.
I am a low-energy user, so why do I feel I’m being penalized?
If one member uses only 1 kilowatt-hour (kWh) of electricity and another member uses 100 kWh of electricity, EECA still incurs about the same cost to build the line, maintain the distribution system, deliver electricity, calculate and bill each member. It takes just as much equipment to deliver 1 kWh as it does 100 kWh. Therefore, each member must pay the fixed costs that are associated with their size of service to maintain the financial health of the cooperative.
EECA does promote energy efficiency through its energy audit offerings to help members reduce unnecessary or controllable energy consumption, and lower their electric bill, in turn lowering our billed amount from our wholesale provider.
Are large power consumers/members going to see the same percentage of increase as the residential members? If not, why?
The cost of service study looked at the minimum amount of distribution equipment required to serve a single member in each rate class. This includes the cost of poles, wire, transformers and meters. In addition, we need to properly allocate the cost of the actual energy and generating capacity (demand) to each member class. Unfortunately, due to the increase in energy rate and demand charges, large power and commercial users will most likely see the largest increase in their bill, because not only will their monthly service and energy charges increase, but their demand charges will also increase.
If the rate increase won’t be reflected in our bills until April, why do my bills seem higher already?
The 2017/2018 winter bill season was extremely cold. Bills cannot be compared from one year to the next based only on dollar amount, as bills are a direct reflection of energy usage (which are heavily dependent on temperature), and energy usage is based solely on your usage patterns and the efficiency of your home.
The Power Cost Adjustment (PCA) is the only line item controlled by us, that has fluctuated month to month. It is not a new line item, and was added back in 2008. It was a charge beginning then into 2012. 2013 and forward it had been a credit, and is used to maintain the financial integrity of the cooperative, as a non-profit, to address unforeseen and fluctuating costs. We implemented a partial PCA credit for September 2017 usage (October bills), and eliminated the credit for November bills.
When the new rates take effect, will there continue to be a PCA charge?
When our March 1, 2018 rate increases took effect for April bills, our margins, and therefore PCA, will be reevaluated monthly. Our rev¬enue is highly impacted by weather, which cannot be predicted, but with improved accounting methods we have implemented for 2018 we will have more accurate timed income amounts to base the PCA on, and are hopeful that the PCA will decrease.
Why can’t I choose another electric provider?
EECA is a distribution cooperative, so even if electric customer choice was practical, EECA would still have a distribution cost structure and would still be the distribution provider. Members do have choices: wind turbines, solar panels, permanent standby generators, propane or natural gas, however, those can be significantly more expensive and not always reliable. Plus, who else is going to pay out capital credits?
Heating, cooling, and hot water are a home’s largest energy loads, typically accounting for more than 60% of a home’s total energy use. You do have a choice of competing fuels and efficien-cies for these, as well as the choice of insulation and appliances in your home.