Manager’s Message — March 2020
2020 Rate Changes
Dear Co-op Community Members:
Rate changes are always a difficult discussion. Last fall, your board of directors faced the tough decision to raise rates. The rate change was effective January 1, 2020. In your January statements, we notified you of the changes to your bill, but I want to follow up with you, our members, on how we came to this decision.
Increasing Fixed Costs
Lane Electric has fixed costs that continually increase and do not vary with energy use. Examples include utility equipment, maintenance, outage restoration, tree trimming and general administration. Another factor impacting our budget was the 2019 February snowstorm. This storm was costly.
While we are able to have 75% of our costs reimbursed by Federal Emergency Management Agency, the remainder is funded by members.
For Lane Electric to be more resilient during extreme weather events, it is necessary that we also continue to invest in our infrastructure to improve the reliability of our system.
Average kWh Consumption Declining
Our annual kilowatt-hour consumption is trending downward. About 78% of our total kWh sales come from residential members.
Our co-op needs a more dependable source of revenue to cover operating costs. This is why you see increases in the basic charge. The basic charge is our most predictable revenue source, but currently makes up only 21% of our electric revenue.
Declining kWh sales could be offset by increasing the number of members we serve. Unfortunately, growth in new accounts has been flat for many years.
The good news is through the years, energy efficiency is more a part of our daily lives. We are surrounded by new homes, appliances, and lightbulbs that help keep our energy consumption low. Lane Electric is proud of the energy conservation programs we offer, and will continue to offer, to our members.
Rate discussions are difficult because we know increases are a burden to our members. We believe predictability—for the co-op and for you—is important and is best achieved through the basic charge.
Winter temperatures vary from year to year. An increase to only the kWh charge in a colder winter could result in the unintended consequence of a windfall of revenue not needed by the co-op and high electric bills for our members.
Lane Electric is owned by you, our members. We are a not-for-profit organization that does not collect money for shareholders. Meeting operational needs with affordable rate structures has been, and continues to be, a focus of the board of directors. The board and all Lane Electric employees are committed to operating efficiently to provide you with reliable electric service.