2018 Rate Increase FAQs

2018 Rate Increase FAQs

On Nov. 1, 2018, Roanoke Electric Cooperative (REC) will implement a rate increase for the first time in nearly six years.  Since we began alerting our member-owners to the likelihood of a rate increase during 2018, here are some of the most frequently asked questions we have received from the membership, and answers to help them better understand the reason for the increase and what it means for them.

 

How much will my bill increase?

The overall rate increase will be approximately 13.52 percent. Individual adjustments will vary depending on the type of account and the individual usage.

Based on average annual consumption, a residential member will see the following increases:

kWhs                Current Rates        New Rates      Increased Dollar

1,000                     $152.00                 $174.00                $22.00

1,500                     $214.00                $245.00                 $31.00

2,000                     $277.00                $316.00                 $39.00

3,000                     $402.00                $458.00                 $56.00

4,500                     $590.00                $671.00                 $81.00

 

 

What is the change to the Basic Facilities Charge?

The change in Basic Facilities Charges will increase as follows:

 

Current Rate

New Rate

Residential Service

$25.00

$29.50

Commercial Service

$42.50

$45.00

 

What does the Basic Facilities Charge represent?

The Basic Facilities Charge helps the cooperative cover the cost of building and maintaining the distribution system and delivering power.

 

Who determines when a rate increase is necessary and by how much?

REC’s board of directors and management continuously monitor the financial stability of the cooperative to determine if or when a rate increase is necessary to meet the revenue requirements necessary to remain financially strong.  To establish the latest rate structure, an independent, experienced firm was hired to review and recommend changes to our rates.

 

When was the last rate increase?

The last rate increase was in October 2012.

 

What is the effective date of the new rates and when will I see this reflected on my bill?

The new rates will go into effect Nov. 1, 2018.  Any bills issued after Nov. 1 will reflect the new rates.

 

What is the reason for the rate increase?

A rate increase is necessary due to multiple factors, including increases in the cost of purchased power and other major expenses needed to run the cooperative, the lack of growth in the region and declining sales in electricity.

 

Will commercial rates increase or is this applicable only to residential rates?

Yes, both commercial and residential accounts will have a rate increase.  The cost of service study offers a comprehensive review of all rates to ensure that each member-owner, regardless of rate classification, pays his or her fair share. 

 

Are copies of the rate schedule available?

Copies of the new rate schedule are available in the co-op’s office in Aulander or you can view them here.

 

I understand that Roanoke Electric Co-op has a program to help those in need in the community; are my rates being increased to support this program?

No.  Funding for Operation Round-up comes from co-op member-owners who voluntarily round up their monthly electric bill to the nearest dollar.  The total contribution per member ranges between $0.12 and $11.88 annually.  That money is then transferred into the Operation Round-up Fund and distributed by the Foundation board to local non-profit organizations.

 

Each year capital credits are returned to members; can Roanoke Electric Co-op keep those monies instead of increasing rates?

REC is a not-for-profit electric cooperative.  However, in order for the cooperative to comply with loan covenants established by our lenders, Rural Utilities Service and the National Rural Utilities Cooperative Finance Corporation, rates must generate sufficient margins (profits) to make both the principal and interest payments on our debt.  Our not-for-profit status mandates that any net margins made by the co-op must be allocated to the membership in the form of capital credits.  By meeting the required margin requirements, by default, REC is financially able to retire a portion of these amounts annually in the form of checks and or bill credits to our member-owners.

 

I understand that rates have not increased since 2012.  Can we expect the same time frame with the new rates? Or is another rate increase anticipated and when?

It is nearly impossible to determine when and how much the next rate adjustment will be.  While REC has not had a rate increase in six years, there are several factors the co-op is now facing that will affect rates. Anticipated increases in wholesale power costs encompass the majority of the rate increase. 

A significant driving factor is recent state laws regulating the disposal of coal ash. While REC does not own any coal power plants, recent state legislation and federal regulations related to the handling of coal ash by utilities will impact the price of wholesale power for the co-op and other utilities that provide wholesale power purchased from Duke Energy.  Beginning in 2018, Duke Energy is recovering costs from wholesale customers for regulatory compliance at its ash storage sites.

The remaining increase can be attributed to the decline in sales at the co-op, as well as inflation on normal operating expenses.

We are committed to doing our best to minimize the impacts to our member-owners by being proactive in our power supply and operational planning and offering energy-efficiency and cost-saving programs and initiatives. We are obligated to maintain the reliability, quality and integrity of our electric system.

However, the fact remains that the cost of power continues to rise, as does the cost of equipment necessary to keep your electrical system operating safely and reliably.

 

What is Roanoke Electric Co-op doing to keep costs down?

The co-op strives to operate efficiently while adhering to our commitment of providing reliable and environmentally responsible electrical service to our member-owners at the lowest possible cost. We continuously evaluate our operations in an effort to keep rates as low as possible by implementing cost- and energy-saving programs, such as:

  • Upgrade to $ave, where $6 million has been secured to make upfront energy efficiency upgrade to member-owners’ homes, churches and places of business to reduce energy usage at these location by as much as 20-25 percent on average.  We are making these investments because they help keep costs down for our member-owners and Roanoke Electric Co-op.  Less than one half of these funds have been used and we encourage all member-owners to see if this program is a good fit for them;
  • Smart system improvements such as broadband, smart thermostats and water heater controls. These demand response programs that will save the cooperative and its member-owners millions of dollars in the future by buying power when it costs less to produce;
  • Smarter meters and down line devices that will help us optimize the amount of power we sell to member-owners; yet another way to reduce costs;
  • Lower cost renewable energy sources.  By the end of the first quarter of 2019, approximately 3 percent of the power we sell to our member-owners will come from solar energy and the price we pay for that power over the next 20-25 years will be lower than the price we are currently paying for traditional sources of power.  We will continue to find more ways like this to stabilize our rates;
  • Competitive bidding in order to pay the best price possible for everything we buy and the  contracts we negotiate to ensure quality service at the best possible price;
  • Collaborating with our neighboring cooperatives to gain volume discounts;
  • Constantly evaluating our day-to-day operations for opportunities to improve and gain efficiencies.

As always, REC management and staff will continue to work diligently to manage costs and to keep rates stable for as long as possible. 

 

What can I do to reduce my electric costs and can Roanoke Electric Co-op provide any assistance in this area?

Billing Services:  REC offers a number of ways to help member-owners manage their electric bills. These services include using power more efficiently by signing up for text alerts to help you monitor energy use or to receive notifications when usage appears excessive and may lead to high bills. We offer flexible payment options, such as Budget Billing and prepay. Mobile apps are available to give member-owners constant access to their billing information.

Upgrade to $ave:  Another major service available is the Upgrade to $ave program.  With this program, REC has committed to invest at least $6 million towards upfront energy efficiency upgrades to member-owners’ homes, churches and places of business to reduce energy usage at these location by as much as 20-25 percent on average.  The co-op’s investment is recouped by way of a bill tariff placed on the member-owner’s electric bill.  The program is designed so the bill tariff is at least 20 percent less than the member-owner’s cost savings after the upgrades are completed.  Less than one half of these funds have been used and we encourage all member-owners to call our office to see if this program is a good fit for them.

Roanoke Connect:  The co-op installs Wi-Fi enabled smart Ecobee thermostats and water heater control devices at no cost to member-owners’ in exchange for their participation in our demand response load management program. When the thermostats are called on to reduce peak demand, the thermostats are adjusted either up or down by a few degrees. Member-owners receive a monthly credit for their participation and have the ability to override the setting if necessary.  Member-owners with Nest thermostats are also able to participate in our demand response program and receive a monthly credit for their participation through the co-op’s Bring Your Own Thermostat program.  These programs require access to a broadband connection.  If a broadband connection is not available at a member-owners’ location, the Roanoke Connect broadband service will soon insure that all member-owners can enjoy this cost-savings option while they enjoy the many other benefits of having broadband internet service.