Empire Electric raising rates

Billing method changing; consumers should watch usage

The first of the year is the time for change. New Year's resolutions are being decided upon and people are vowing on better decision making. Perhaps that should include being more environmentally responsible.

As of January 1, Empire Electric Association will once again raise their wholesale rates 4.9 percent for every residential, commercial/industrial and time of use customer. In comparison to the rise in rates in January 2012, this represents a mere 2.3 percent influx, which was a reflected increase for rising costs in operations and cost for wholesale power.

Two major changes will take place with the percent increase. The first is that Empire will now incorporate what is called a facilities charge. The second is that they will separate the traditional energy charge and demand component to just an energy charge. Now, consumers will pay a facility charge and an energy charge.

Whereas utility bills used to reflect general usage, that old adage is now inaccurate. The more electricity you use, the higher your bill will be. The less you use, the less your bill will be. These statements are no longer applicable.

"What we are facilitating now is similar to a car and a car payment," said Mary Thiesing, corporate operations manager for Empire.

She explained that the facility charge is like a car payment. No matter if you drive that car or not, the payment must be made every month. Once the car is driven, the gas used to power that vehicle is the energy charge.

In January, for an average residential home, they will see a large jump in facility charge from $19.50 to $30.73. This rate will stay intact. The energy charge, or the kilowatts per hour used (kWh), will be an additional $0.0959 per kWh. To compensate for the facility charge increase, EEA reduced the cost per kWh. In actuality, an average residence should not see an extreme increase in their utility bill so long as their kWh usage stays in moderation.

"We separated our costs for providing service to consumers and made sure they were transparent to show the actual cost of doing so," said Doug Sparks, member services manager of EEA.

This decision came about because Tri-State Generation and Transmission, the company EEA purchases power from, drastically changed the way they charge for power. Empire itself does not generate power. They are a nonprofit rural electric distributive cooperative that purchases power to supply its service territory.

The change from their supplier caused Empire to look hard at how they deliver electricity. An independent rate consultant was hired to allocate the appropriate cost data from a test year, 2011. They looked at the change in costs of power from 2011 to expected changes in 2013 and made the necessary adjustments.

The primary reason for the second rate change was simply because EEA's internal cost of power is becoming a wild card. Tri-State can choose to raise their cost of power at any point in time.

Empire has taken various measures within their own company to reduce costs so that it did not affect their customers such as decreasing their number of employees. However, old infrastructure, powerline maintenance and replacement and building upgrades are a costly expense. Most of the inner workings of EEA are more than 70 years old. In fact, the new Empire facility being built off of Highway 491, will replace a building that is 80 years old.

In the past, Empire has been able to help fuel the growth of their system, but other variables are causing a wayward stretch in their funds.

"In the winter, when more power is being used to heat homes, we are making money," Thiesing said. "But when the weather is mild our profits are reduced."

In other words, it is hard to maintain their internal costs with an extreme profit fluctuation. Place an ever growing cost of service fee on top of that, and Empire discovered their pockets had a few holes. EEA has been able to keep cost of service minuscule because they had remarkable growth. The last three years, Empire has seen a minimal growth period. Sparks is fairly positive the future will not see any difference.

So for stability reasons, Empire has included a Power Cost Adjustment cost into their new billing, to include any future rate changes that could occur. At the moment, that PCA cost will remain at zero, but if Tri-State decides to increase internal costs at any point in time, this formative clause states that utility bills will adjust haphazardly.

"The PCA cost is to better account for future rate increases so that we can quickly adjust rather than look back and see how to recover our costs," Sparks said. "Currently, this will not be effective and will remain at zero until Tri-State alerts us to another increase."

No changes are expected in December billing. Starting Jan. 1, Empire customers will see the new facility charge and all usage for that month will begin under the new energy rate.

In addition they will include company literature that may clear up any questions on usage, changing costs and comparisons in fees. They will however, eliminate the time of rate fees for peak hour periods.

For now, Sparks is adamant that consumers should be more efficient with their energy use. Replacements of appliances is an expensive task but there are plenty of small things consumers can do.

"A compact fluorescent bulb is more efficient and will save on kWh usage," Sparks said.

He also stressed that old appliances use more juice to run than newer economical appliances. It is up to the consumers on whether or not sufficient appliances are worth the purchase, but in the meantime unplugging any appliances not being used is a way to save energy. And it may pay off to reconsider any additional television purchases as they tend to use a fair amount of kWh to power.

"Reevaluate your home," Sparks said. "Because electricity will continue to rise in price per kWh from our supplier. We know that for a fact."