Power Costs Inflation Driving Need for Rate Adjustment
Across our nation, we are all feeling the pressures of increased costs. We especially see it at the grocery stores and the gas pumps. Unfortunately, these costs impact us all, businesses and consumers. Valley Electric is also feeling the effects of inflation and has worked hard to mitigate the rising costs.
As a utility, we are currently being impacted by the rising costs of power, along with goods and services we use in our daily operations. Valley purchases electricity each month from a combination of long-term contracts and short-term purchases from the Western Power Grid at a wholesale cost to meet the needs of our members. The cost of wholesale power delivery is a significant expense of providing electric service to the homes and businesses we locally serve. In power cost alone, Valley has seen an increase of almost $20 Million. We are also seeing rising costs in operating equipment necessities like transformers, meters, poles and wires. Costs for these items have doubled or more, along with being hard to obtain due to supply chain issues.
Addressing power delivery costs, Valley has experienced an increase of $14.5 Million between 2019 and 2022, and forecasts an additional $5 Million in 2023. Valley Electric is a not-for-profit electric utility, that is committed to delivering safe, affordable, reliable power for our members while remaining financially secure. In May of 2022; we began the process to align our rates with the power supply market by increasing the basic service charge for our members. This helped to recover $4.2 Million of the $14.5 Million increase we have experienced since 2019.
Despite our best efforts to find ways to prolong any further increase, in order to, ensure financial stability, the Board voted on and approved an energy rate increase for all service types, effective January 1, 2023. The new rates are shown below for each rate class.
How will my bill be impacted?
On an average residential bill of 1250 kWh, there will be an increase of approximately $32 a month (17.24%). On your January bill, you will see two separate line items, one for the old kWh rate and then the new kWh rate until the transition is complete.
Is this rate adjustment permanent?
Valley anticipates that the inflationary impacts driving this rate adjustment will be permanent. However, in the near future, Valley’s rates may look different.
Over the coming months, Valley will be introducing other tools to help members have more control over their power bill. During 2023, as part of Valley’s plan to align its rates with power market incentives and become consistent with many other electric utilities, Valley anticipates introducing:
- A Time-of-Use rate structure for its Residential members.
This would mean a lower energy charge in most hours, and a higher energy rate in a few peak hours.
- A similar adjustment for Commercial and Irrigation customers, reducing energy charges, and shifting an equivalent cost into the demand charge.
These changes will give members the control over their electric bill by giving them the ability to use more energy when power costs are lower, allowing them to save money. The Time-of-Use concept centers around shifting household chores such as charging your electric vehicle or running the dishwasher in the middle of the night when possible during periods when energy prices are lower. Both above measures are anticipated to collect the same revenue for the cooperative, while generating a savings in power expenses.
What can members do to save money today?
We offer a variety of resources to help members control their usage. These tools can help members become more energy efficient as well as giving tips on how to improve the way energy is used.
We know these increases are hard and we don’t take rate adjustments lightly, but this change is necessary to cover our operating expenses and keep the Cooperative financially sound. We understand the economic challenges our members face and will continue working to control costs by operating safely and efficiently to provide the most reliable electric service possible.
Be on the lookout for more ways you can save in upcoming Ruralite editions.
Electric Costs Increase 17% in 2023:
