CEC customers told of rate structure change

Published 11:41 pm Thursday, April 9, 2009

During Thursday morning’s Chamber breakfast, someone asked PowerSouth corporate communications manager Mark Ingram why power distributors add power cost adjustments to electric bills rather than just increasing power rates.

Ingram quickly redirected the question to Covington Electric Cooperative manager Ed Short. Short couldn’t have asked for a better segue.

“Come to our annual meeting tonight and you’ll find out,” he quipped.

Last night, Short told CEC’s members attending its annual meeting that it’s time for the cooperative to move to cost-based rates.

“As rates have increased and the economy has slowed, we have reduced kilowatt usage,” Short said. “This apparently is the new administration’s idea: reduce the use of electric energy. The proposed carbon tax and other proposed initiatives just may do that, get the cost high enough to force reduced usage.

“Energy conservation is a big part of the new agenda,” he said. “But high temperatures and high humidity will make it hard for us South Alabama residents to not use air conditioning in the hot, humid summertime, even if for shorter time periods.

“If we grow, this will result in a need for more generating capacity even if used for short periods of time. This generating capacity and the infrastructure to deliver the power to the meter will be the same cost to put in place regardless of how much it is used,” he said. “Just like the truck or tractor, the initial cost is the same whether it is used a lot, some or none.”

With a change to cost-based rates, which CEC plans to implement in July of this year, customers with minimum and low kilowatt usage bills will see the largest percentage increase, but a relatively low dollar increase, he said.

For instance, the rate for a 175 watt security light will increase $2.07 a month, from $5.84 to $7.91.

“In the 600 to 1,200 kilowatt usage range, there will be less than $5 change in the total bill,” Short said. “In the above 900 kilowatt hour usage range will see some decrease in the average kilowatt hour cost.”

Residential facility charges will increase by $14.21, to $35.63 per month, he said.

“This will cover operating cost with required margins to satisfy the bankers we use for system improvement financing,” Short said. “The kilowatt hour charge will have energy and energy-related costs in it.

“With cost-based rates, each member will be more nearly paying their fare share of the cost for their type of service,” Short said. “This will allow CEC to help member conserve when they want to without jeopardizing the financial health of the cooperative.

“With cost-based rates, if you choose to reduce your usage you can save on your bill,” he said.