If you read my column regularly, you know I love a good analogy. I’m throwing a new one out this month to try to make sense of the service charge and rate restructuring that we’ve been addressing.
We’re both in the market for a new car, and pull away from the lot with the same make and model. We’re each left with a set of fixed costs, including car payments, insurance, plates and taxes, and maybe an evergreen air freshener to hang from the rear-view mirror.
Now think about how we use the car. I drive a lot. My daily commute is 50 miles round trip, and I frequently travel for work. I spend many weekends up north, and visit my grandkids often. I easily log 30,000 miles a year. You’re a more typical driver, averaging 12,000 miles annually. We’ve each got variable expenses for fuel, tires and other maintenance, but mine are higher based on my usage.
Your service charge is like the car. You have fixed costs you have to pay, whether or not the odometer ever registers a mile. Your energy charge is like the fuel and maintenance expenses; it varies with how much or little you use the car.
At April’s special meeting, the board approved the rate restructuring proposal. This is not a rate increase; it’s a revenue-neutral restructuring. We are not collecting any additional revenue, but are simply moving charges from one line to another.
There are significant fixed costs associated with making electricity available, regardless of whether or not you ever use it. It’s the car, and the service charge should reflect all of those costs. Right now that’s not the case. Many of the fixed costs are currently in the variable Distribution kWh Charge, meaning members using more energy are paying more for fixed costs.
Every member should pay a fair and appropriate share of the infrastructure and other costs required to make electricity available to their rate class, and this restructuring accomplishes that. As the Service Charge increases over the four-year implementation, the Distribution kWh charge will decrease. The result is that every member will pay their fair share of the car.
The legal notice about the rate restructuring is on page 5 of your June Country Lines. If you have questions or want to understand the impact on your bill based on historic usage, please feel free to contact us at 800-492-5989.