2024 Rate Changes Announced: An Exercise in Balance - December 2023 CCL CEO Article
Service Reliability and Affordability Drive MVEA's Rate Decisions
By Ruth Marks, MVEA CEO
In September, Mountain View Electric Association completed a member survey through the National Rural Electric Cooperative Association to measure our American Customer Satisfaction Index Score. I’m proud to share that we increased our overall satisfaction score from 79 to 85 since our last survey in 2017. While there were new insights provided in the report that will help us meet the needs of MVEA’s growing membership, there are two areas that have remained important to all MVEA members: service reliability and affordability.
These two areas are also important to MVEA’s Board of Directors and drive its rate change decisions. The Board is committed to balancing increased power costs with long-term service reliability, affordability, and rate stability for our members. Earlier this year, we shared that our wholesale power supplier, Tri-State Generation & Transmission, had indicated that it would be increasing its rates in 2024. Those rates have been approved and will increase MVEA’s wholesale power costs by approximately 8%.
Changes to Tri-State’s rate structure directly impact the rates that MVEA pays for wholesale power, as well as the electric rates of our co-op members, because the cost of power accounts for 65% of our overall operating costs. As a not-for-profit cooperative, the only viable way for us to recover the increased cost of purchasing and supplying power to our members is to share that expense. MVEA’s rates are set to generate revenue to cover operating costs, pay debts on construction loans, and provide an emergency financial reserve — not to create profits.
Thankfully, due to MVEA’s strong financial health and long history of fiscal stewardship, while our wholesale power cost will be increasing by 8% the impact on the rates members pay will be less. At the October meeting, MVEA’s Board approved adjustments across all rate classes that average out to roughly 6%. Based on specific rate classes, changes have been made to kilowatt-hour (kWh) rates for actual energy use as well as the monthly grid access charge. These rate changes will be effective January 1, 2024, and will appear on bills calculated after December 31, 2023.
For the average MVEA residential member using 925 kWh a month, the change will result in a $4.55 increase on the kWh electric use part of the bill along with a $3.50 increase in the grid access charge. The total monthly change will vary based on electric usage, but will average out to $8.05 or a 6.9% increase per month.
How were these rate changes calculated? With some help from experts. MVEA worked with an independent rate consultant to develop a cost-of-service study (COSS) to assist in analyzing and forecasting rate adjustments for each of our rate classes. Since our last residential rate increase in 2017, the overall cost of providing reliable electricity has increased due to a variety of factors, including inflation; labor and supply shortages; and the industry-wide cost of transitioning to clean energy. The purpose of a COSS is to determine what it costs to serve each member by rate class and to recover those costs in the new rate design.
How do MVEA’s current and 2024 rates compare to other utilities in the state? According to the July 2023 Colorado Association of Municipal Utilities’ survey of Colorado’s electric rates, we are right in the middle when compared to other electric utilities (including electric cooperatives, municipalities, and investor-owned utilities).
Rate changes are a hard but necessary part of running a not-for-profit business that relies on innovation and technology to provide a safe and reliable service – especially one that is as essential to our daily lives as electricity. Please know that MVEA is committed to making sure that our business practices are sound, our rates are competitive during an era of increasing costs, and our commitment to the membership is at the heart of our business decisions.
In closing, I want to encourage all members to take a closer look at MVEA’s Time-of-Day rate. This rate offers a cost-saving solution to members who can shift their energy use away from 5-9 p.m. (Monday through Saturday) to off-peak hours when the cost of wholesale power is less expensive. This rate can help members manage their electric bill, not by changing how much electricity is used every month, by simply changing when it is used.
For a detailed breakdown of the rate changes for different rate classes and an easy-to-use rate calculator, visit www.mvea.coop/rates or call 800-388-9881.