By CEO Jon Miles
PCEA has been communicating to members about rate changes that have been implemented for this month’s billing. It may seem confusing to members why some rates are decreasing, and others are increasing.
For residential members, the Distribution Cost Adjustment (DCA) charge is decreasing to $0 but the facility charge is increasing.
What’s the point?
Determining the appropriate rate to recover costs is an in-depth and complex process. As a not-for-profit electric co-op, PCEA’s goal is to charge only enough to cover costs. We use our margins to run and expand the business, and any excess margins are allocated and eventually returned through capital credits.
To determine the right rate for each rate class – such as residential or commercial – electric utilities can undergo a cost of service study or rate study. PCEA has not conducted a rate study since 2008, and the base rates – the energy charge and facility charge – have not changed since 2009. It was due time for the co-op to reevaluate and adjust rates to fairly recover costs, so the co-op hired a third-party company to conduct a study and provide recommendations.
Ensuring rates are fair and equitable across all rate classes is important to co-op members, because the revenue derived from the rates paid by the members for electric service is what funds the operation of the co-op. The co-op uses the philosophy that the cost causer should be the cost payer. Having multiple charges in each rate allows the cooperative to bill members as fairly and accurately as possible. Therefore, it is important for the co-op to periodically review rates and adjust as needed to accurately and fairly bill our members.
Detailed information about changes to your electric rates have been mailed to each member, and is published on our website at www.pella-cea.org/2021-rate-changes. As always, we’re only one phone call away if you have any questions.