By Ryan Campbell, EREC CEO
Introducing a rate adjustment is always a tough decision.
While prices have been on the rise, Escambia River Electric Cooperative has worked to minimize controllable expenses to keep up with inflation instead of raising rates for members. Unfortunately, the time has come when we are not able to cut controllable costs and keep up with the rising costs. We need to make a modest adjustment to address the rising costs of delivering reliable electric service.
In the October bill stuffer, we announced residential members will see a flat increase of $3 per month on the facility service charge portion for electricity and water and a $10 flat increase for commercial electric members beginning immediately.
The Good News
In December, we expect the average member’s bill to go down by more than this modest increase.
This decrease is because the EREC system peak in January 2024 (remember when it was 19 degrees here?) caused the next 11 months’ bills to be higher because of the cost of generation during that peak. We, too, are looking forward to this decrease, assuming there is not another cold period.
What is a Facility Service Charge Adjustment?
The Facility Service Charge is rolled into your kilowatt-hour usage on your bill and is a small portion of an average member’s total bill, which covers local distribution expenses. Some examples of these expenses include the maintenance and replacement of power poles, transformers, wire, computer equipment, bucket trucks, and labor.
A Tough Decision
After an extensive analysis of our financials, we determined that rising costs are outpacing our revenue projections. Therefore, this adjustment became imperative to continue fulfilling our mission of providing reliable and resilient energy to all our members.
Our not-for-profit business model prioritizes the interests of members over profits for shareholders. We exist to provide a service, not to generate profits. In other words, we are solely focused on the needs of those who use our service.
Being a cooperative does not exempt us from the rising costs of goods and services. You may have felt the effects of recent inflation and rising prices. Nearly all sectors have been forced to raise prices, creating a domino effect that negatively impacts the economy.
Providing Reliable Energy is Increasingly Expensive
Since 2020, essential equipment prices—including wire, poles, and transformers—have increased. Vehicle prices have also increased.
We have a responsibility to provide equipment and vehicles that are up to modern safety standards and provide adequate resources to meet those needs. Look at the graphic to the right that shows the increase in some of our expenses over the past few years.
The Future of Rates at EREC
EREC’s rates are still among the lowest of electric co-ops in our region, and we are determined to keep them that way.
I know this adjustment is not a fun topic, but you can rest assured our team will continue to do everything we can to limit our controllable costs and keep rates affordable for many years to come. Thank you for your membership with our cooperative. I wish you and your family the very best.