HomeLink Magazine Summer 2017: YVEA Rate Change
Why a Rate Adjustment Can be a Good Thing
By the YVEA Member Outreach Team-Megan Moore-Kemp, Tammi Strickland, Shawn Stoehr
On July 1st, 2017, Yampa Valley Electric Association will implement a rate adjustment. YVEA is a not-for-profit member-owned cooperative, going strong for 75 years. As a healthy non-profit, why do we need to adjust rates?
Historically, YVEA has kept electricity rates low for their members. While virtually all aspects of today’s cost of living continue to rise, we pride ourselves on avoiding routine price adjustments. Nearly 20 years ago, in 1990, the average cost of a dozen eggs was $1.01, the price of a gallon of gasoline at the pump was $1.16, and the price of a kWh of electricity from YVEA was $0.0664. (Source: US Dept of Labor Bureau of Labor Statistics and YVEA archives) While the price of eggs and gas have each risen around 70 to 80 percent, YVEA’s rates have only risen 24 percent. It’s also interesting to note that in 1990 the national average cost of a kWh was .084, higher than YVEA’s current 2017 residential rate of 0.0822/KWh for electricity, proving that we only consider an adjustment when we really have to. We believe reliable electric service at a reasonable price is something you can count on and we deliver it every day.
In 2016, Yampa Valley Electric Association performed a Cost of Service and Rate study with the assistance of hired analytic firm, The Prime Group. This tool, used throughout the utility industry, analyzes whether the rates utilities are charging customers reflect the cost of providing service to different classes of customers such as residential, commercial, industrial, etc. The study provided important information to YVEA regarding which classes of customers may be paying too much or too little for the electric service they’re being provided.
As a result of the study, YVEA found that our rates must be restructured in order to distribute the costs of power to our members on a more equitable basis, and thus the YVEA Board of Directors approved a rate change. At the heart of the decision to adjust rates is the motivation that they be objective, fair, and equitable.
Rate design is a balancing act between meeting our revenue needs while minimizing the overall financial impact to our members. As a not-for-profit organization, we must recover our costs of doing business, as well as maintain sufficient margins to reinvest in our electric distribution system. The Cost of Service study identifies the total revenue requirements for the cooperative. Through the Cost of Service Study, costs are allocated appropriately to each customer classification based on the service, equipment and infrastructure required to serve them. For example, a large power user requires more distribution infrastructure to get the power they require than a customer using an average amount of power. Once completed, rate structures are designed to meet the needs of each classification. Remember, electric cooperatives were created by communities to provide a much needed service, so everyone must pay their cost of operating it.
One way to understand how YVEA recovers costs is to take a look at your bill. You will see the two ways we recoup costs listed as a “consumer charge” (soon to be renamed a “system access cost”) and an “electric” cost.
The consumer charge/system access cost ensures that your expectations for continuous power and outstanding customer service are met. It gives each member a fair and equal share of the cooperative’s operation. It is your security that the quality, reliability and integrity of services that our members have traditionally counted on and come to expect will be delivered.
Among the expense items covered by the consumer charge/system access cost are
- Trucks, wire, transformers, power poles and labor needed to build and maintain the electric distribution system
- Keeping pace with increased system investments to improve both capacity and reliability
- Implementing new technologies to provide increased reliability and operational efficiencies such as the outage management system and advanced metering
- Liability insurance, interest, taxes, and emergency storm restoration
Because all cooperative members benefit from having reliable electric service available when they want it, the consumer charge/system access cost ensures that everyone pays their fair share of the basic costs—costs that exist whether or not a single kWh is used.
The “electric” line item on your bill represents the energy and capacity costs which is about 70 cents of every dollar you pay. As a distribution cooperative, YVEA does not generate power, but rather, purchases it wholesale from Xcel Energy. Therefore, the amount of electricity or Kilowatt hours you use in your home or business will impact how much YVEA has to buy for you, and in turn how much you have to pay YVEA. While the consumer charge is a fixed charge, the electric charge fluctuates depending on how much electricity you use.
At YVEA, we place a strong emphasis on providing our members with exceptional service. To maintain the quality, reliability and integrity of the services we provide, it is necessary for us to periodically review and adjust our pricing structure.
Saving Energy with YVEA
YVEA is plugged in to help customers control costs
Cen$ible Energy - created through community partnerships, this energy efficiency rebate program helps customers take sensible and practical steps to save energy and lower electricity bills. The rebate program currently covers LED lights, Energy Star appliances, programmable thermostats, energy audits and air sealing. More info at www.censibleenergy.org
Complimentary Energy Surveys - If you have a concern about your energy usage, call 970-879-1160 to schedule a visit with one of YVEA’s Energy Advisors. They will spend about an hour with you at your home or business reviewing your usage history and conducting a walk through to look for ways to save energy. Advisors will help you calculate the usage and cost of energy intensive devices such as space heaters, heat tape, and old refrigerators, and provide examples of the payback of making energy efficient purchases.
Advanced Metering Infrastructure - currently being deployed, these meters will enable customers to access timely energy consumption data, and thus have greater control over their usage.
Smarthub -With our SmartHub app on your mobile device or using our SmartHub service online, members are empowered to view and track usage, report and view outages, pay their bill and more.