Rate change explained

Posted on Nov 29 2018 in Decatur County REMC

Last month, Decatur County REMC announced that, upon completion of a cost of service study, an overall rate increase will be implemented in April. Below are details that explain more about the upcoming rate change.

How much is the rate increase? when does it go into effect?
DCREMC is implementing an overall increase of 1.28 percent effective April 1, 2019. The increase will vary among member classes. Members will see the change reflected on their May 2019 electric bills. Final rate numbers will be communicated soon.

When was the last rate increase?
DCREMC’s last rate increase in 2014 introduced an overall increase of 3.09 percent. Those rates were designed to last three years. Through cost-saving efforts we’ve been able to extend the life of the current rates.

Why a rate increase?

  • Need for cash flow to keep DCREMC in a position to meet financial and loan obligations and accommodate rising costs of equipment and materials due to inflation.
  • Aggressive right-of-way approach (which was not accounted for in 2014 rates) to improve system reliability.
  • Hoosier Energy (our power supplier) is implementing rate realignment planned for April 1.
  • Strategy to increase investment in aging infrastructure.
  • Cost of service study revealed a need to realign and reallocate revenue (every rate class needs to pay its fair share).

Who decides when a rate increase is needed?
DCREMC’s board of directors sets the cooperative’s rates. The board consists of members who pay the same rates you do. You and other members elect them each year. Board members work to ensure rates are adequate to maintain financial stability, provide the revenue required for delivery of reliable electric service, and avoid subsidization among rate classes.

Who calculates the rate increase?
DCREMC’s board of directors hired an independent rate consultant to conduct a cost of service study (COSS). The COSS is a tool used to set rates that fairly and equitably break down the costs of providing service to each rate class. Each rate class has unique load and service characteristics that affect costs. It is important as a cooperative that everyone pays his or her fair share.

The COSS offers guidelines to assist the board in responsibly allocating costs and helps design rates that ensure each rate class generates set revenue requirements in a way that avoids any class paying more than its fair share.

What can members do to manage the change?
DCREMC offers a number of options to help members manage their electric bills. Valuable services include monitoring of daily/weekly/monthly energy use with our secure SmartHub online energy portal, budget billing, LED discount lighting, home energy audits, rebates on HVAC, water heaters, and appliance recycling. Additional energy efficiency information can be found on our website at dcremc.com.