RECC will soon enter the second phase of its wholesale power contract with NextEra Energy. As part of the long-term agreement, wholesale power costs are scheduled to increase moderately in the sixth year of the contract. On June 1, 2023, members will see changes in most RECC rate classes. Energy charges will increase across several rate schedules, but monthly facility charges will remain unchanged. The higher rates are necessary for the cooperative to meet its financial obligations and maintain long-term stability.
During the first five years of the NextEra contract, most of the savings from lower power costs were calculated into RECC’s rate structure and passed along to its members. Between January 2018 and May 2023, members’ costs were lowered through reduced rates, lower facility charges, and power cost adjustment (PCA) credits. The Board believed that it was important to pass along these savings directly to the membership, even if the reductions were short-lived or temporary.
Wholesale power makes up about 60% of the cooperative’s yearly expenses, but other factors can impact rates. These include transmission fees, tariffs, operating expenses, interest on debt, margins, and depreciation. In the last few years, inflation has disproportionately contributed to the cooperative’s operating expenses. Then there is the unexpected, like natural disasters such as ice storms and tornadoes. Still, wholesale power prices will always be the driving factor in setting rates, but it’s reassuring that the cooperative’s largest and most unpredictable expense will be locked in until 2033.
Rate 1 – Stability continues after 2023 adjustments
While virtually all aspects of today’s cost of living continue to rise, RECC has enjoyed one of the longest periods of rate stability in recent history. For our Rate 1 consumers, which is by far the majority of our membership, the cost of purchasing electricity is still less than it was in 2012. On the chart below, you will see just how consistent this rate class has been.
There are over 4,200 members on Rate 1, which is officially described as the Residential and Farm Service rate. The current Rate-1 schedule has not changed since 2009, but power cost adjustments or PCAs have have been applied several times to increase or decrease the overall price per kilowatt. The PCAs have ranged from +.085 to -.007. In 2019, the facility charge was reduced by $6.00 per month. Overall, the rate has remained incredibly stable and consistent over the last decade.