December 6, 2012

Tri-County Electric to Increase Rates in January

After extensive consideration, Tri-County Electric Cooperative's Board of Directors has approved a rate increase of 1.6 cents per kilowatt hour sold. In addition, a Power Cost Adjustment (PCA) will be added to the existing rate. The rate adjustments will take effect on January 1, 2013, with the January bill being due by February 20, 2013.

Tri-County's cost structure is based on power purchase projections of 47% with other operating expenses constituting the remaining 53% of the budget.

"The cooperative has little control over purchased power costs and they have continuing upward pressure from a variety of sources," Kevin Wheeler, Manager of JT&S and Member Services at Tri-County Electric Cooperative, said in a press release.

Wheeler said the factors include the rising cost of fossil fuels used for generation (coal, natural gas, oil); shortages of generating plant capacity and increasing construction costs for generating plants; transmission system congestion; and increased environmental and regulatory requirements.

"Purchased power costs represent a large percentage of Tri-County's total cost," said Wheeler. "Therefore, even a small increase in the purchased power rate has a large impact on the cooperative financially."

Thus, Tri-County has chosen to add a PCA to the cooperative's existing rates. Cooperative officials indicated that the PCA will allow Tri-County to recover or refund the difference between the power costs that were in effect when rates were structured and the current monthly power costs. With the PCA, members will be charged for the current cost of power, rather than a set historical rate.

Other operating costs that Tri-County incurs, which will be covered by the 1.6 cents per kWh charge, include contract labor; employee and director costs; fuel, equipment and vehicle costs and property and liability insurance. Other costs include legal fees, debt service, property taxes, material, inventory and supplies for distribution system construction, office, IT, and communications and member relations expenditures.

"The costs listed above are subject to pressure from inflation, rising health insurance and benefits costs, rising fuel costs, increased raw material prices, interest rate pressures and other factors," said Wheeler.

The cooperative notes that the expenditures Tri-County has experienced in the last several years have exceeded the revenues available. As may be expected, this has resulted in a declining equity position. In addition, construction and maintenance projects have been delayed due to financial constraints. The absorption of excess costs has developed over time as a result of past attempts to minimize the cost of electricity to our members.

"Tri-County directors and employees still desire the lowest rates possible," Wheeler said. "However, in order to maintain operational and financial stability and to provide reliable and safe service to our member owners, we cannot continue to absorb excess costs. We empathize with ongoing increased costs of living and regret the necessary rate adjustment. We appreciate the membership's continuing support through this difficult decision and expect that our members will benefit from the additional system maintenance efforts that this rate increase will support."



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