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PAGE 4 | AUGUST 2013


Electricity keeps folks cool... until the bill arrives


BY SHEILA BLANKENSHIP, Tri-County Electric member and owner of the Hooker Advance A


s the temperatures climb, residents turn up the air conditioning to keep their cool...at least until the electric bill arrives.


And that is when people question the price of their electricity and begin to wonder how the cost of power can be so high.


Tri-County Electric CEO Jack Perkins said any members with questions or concerns regarding their bill should contact the cooperative’s member service department at 800-522-3315 or info@tcec.coop.


The member service department reports to Zac Perkins, assistant general manager, who reports to the CEO.


“At Tri-County Electric Cooperative, we understand the financial strain our members face and sympathize with those who may be struggling to pay their bills,” Jack Perkins said. “As a cooperative, we were formed by communities to provide a much-needed service.”


He noted that Tri-County Electric offers many programs to help members understand and take control of their energy use such as prepaid billing, levelized billing and online energy analysis.


Jack Perkins said the four main factors that determine the cooperative’s rates are power costs, operating costs, fixed costs and margins required to meet financial obligations.


Wholesale power costs refer to energy and capacity costs which accounts for about 60 cents of every dollar paid.


Energy costs include the fuels used to generate power, such as coal, natural gas and renewable resources like wind energy.


A global increase in competition for these fuels and other materials increase the energy portion of wholesale power costs.


Capacity costs pay for the availability of power from the source and are related to construction and maintenance of power plants.


Increased environmental regulations and reduced output resulting from those regulations impact the capacity portion of wholesale power costs.


Power Cost Adjustment or PCA refers to a variable built into Tri-County Electric’s rate structure so rates could be adjusted when energy and capacity costs change. Using the PCA helps avoid large, permanent rate adjustments due to the volatility of wholesale power costs.


Operating costs are another factor affecting the bottom line on electric bills and are the only portion Tri-County Electric can influence. Such costs account for 16 cents of every dollar paid by members.


These costs include building and maintaining power lines, power restoration, communications, billing, member service, metering, administration, employees and everything else it takes to run a business.


Fixed costs are also paid in the monthly bills and must be paid regardless of sales to members. The cooperative has very little control over these costs which include depreciation, amortization, property tax, gross receipts tax, interest on long term debt and other deductions like charitable contributions and sponsorships.


Margins required to meet financial obligations are also included in the cost to members. As a not-for-profit electric membership cooperative, any revenue collected in excess of operating expenses and fixed costs is returned to Tri-County Electric members in the form of capital credits.


The cooperative’s 2012 Annual Reports includes a chart showing capital credits returned over the last 10 years. Tri- County Electric is looking out for local members while investor-owned utilities are looking out for distant shareholders.


“Members frequently compare us to larger, investor-owned utilities in the state,” Jack Perkins said. “That is a poor comparison because they serve many more meters per mile of line than a cooperative like Tri-County Electric.”


The CEO said the cooperative’s rates are based on a cost-of-service study the cooperative regularly performs to ensure its financial obligations are met.


Jack Perkins added that Tri-County Electric’s residential rate averages eight cents per kilowatt-hour, which is lower than that of 75% of the cooperatives in the nation, according to Touchstone Energy Cooperatives’ 2012 balanced scorecard data.


Members should note that the average rate per kilowatt-hour does not include other charges and taxes.


Perkins explained that an electric bill reflects the energy charge and the PCA as well as a service availability charge which members sometime question.


This charge recovers a portion of the cooperative’s investment in the infrastructure required to provide electric service. The infrastructure includes metering, poles, wires, transformers and substations. The balance of the infrastructure cost is captured in the energy charge.


Even considering the many factors reflected in the amount due each month, the key to lower bills remains how much electricity is used.


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