2018 Rate Changes
Rate design is a balancing act between meeting our revenue needs and minimizing member impact. Since we are a not-for-profit organization, we do not need large profits to satisfy investors. Rather, we simply need to recover our costs of doing business, as well as provide sufficient margins to reinvest back into our electric distribution system.
Effective January 1, 2018 members will receive a $6.00 facility charge increase. Members with three-phase demand services will see a couple of changes; the demand charge will increase from $7.50 to $11.50 per kilowatt and the energy charge will decrease from $.093 to $.085. Additionally, several rate classes will realize a slight decrease in the energy charge. Members should expect the changes on February bills for January usage.
It is important to note that utilities are a high fixed cost business which means that regardless of how many kilowatt hours we sell, we still have the same expenses month to month. The cost of material to build and maintain our lines, labor, vehicle expense and many other expenses increase over time independent of the number of kilowatt hours we sell. In a time of declining kilowatt hour sales due to weather, economic conditions, energy efficiency and member self-generation of power; cost recovery has to be spread over fewer kilowatt hours and as a result rates will increase.
We are asked from time-to-time, what is the facility charge? Your power bill has three components; the facility charge, the energy charge and a purchased power adjustment. The intent of the facility charge is to cover the fixed costs we incur to build and maintain the system that carries the electricity to your home or place of business. Even if we never move a single kilowatt over the wires, we still face these expenses in keeping the facilities in place to carry that energy.
McDonough Power Cooperative’s rate design mission is to establish rates for the membership that are consistent, transparent and ensure the financial stability of the cooperative. The rates established will provide for sustainable, high-quality delivery of electric service.