2016 Rate Increase
2016 Electricity Rate Increase
Frequently Asked Questions (FAQ's)
How much will my bill increase?
The overall rate adjustment is projected to increase revenues to Capital Electric Cooperative by approximately 12 percent. Individual adjustments will vary depending on the nature of your service and consumption levels.
When was the last rate increase?
Capital Electric works diligently to control costs, and we have kept our general rates stable for the last 4 years. We take great pride in providing safe, affordable and reliable service at a reasonable cost. In fact, we are very proud to say that Capital Electric is consistently in the lowest 5 percent of more than 800 electric cooperatives nationwide in controllable costs per-consumer.
Who determines when a rate increase is necessary and by how much?
Capital Electric’s board of directors and management continuously monitor the financial stability of the cooperative to determine if or when a rate increase is necessary. To establish the new rates, an independent, experienced firm was hired to perform a cost-ofservice study, and recommend changes to our rates and how they are structured. Ultimately, the nine fellow cooperative members who are democratically elected by the membership to serve as board members make the decision, after careful consideration of the financial needs of the cooperative and the impact on our members.
Why is the rate increase higher than normal?
The main driver of this increase is an unplanned midyear wholesale power rate increase of nearly 11.6 percent, effective Aug. 1. Wholesale power costs represent nearly 71 percent of all operating costs of the cooperative, and accordingly, have a proportionately significant impact on your power bill. According to our wholesale power provider, Basin Electric Power Cooperative, they experienced a perfect storm of circumstances that occurred rapidly. Mild winter weather and reduced oil and coal activity led to significantly lower sales. Furthermore, low commodity prices resulted in reduced revenues at Basin Electric’s subsidiary, Dakota Gasification Company. Moreover, recent generation and transmission investments added costs to operating generational facilities. During a 12-month period, this wholesale power rate increase will raise Capital Electric’s power costs by upwards of $2,800,000. Another contributing factor is that Capital Electric’s had already budgeted for our first general rate increase in 4 years, which was also to be effective in October. This increase of between 4 and 5 percent was intended to cover increased material, labor and operating costs that have occurred since our last general rate increase.
Will the new rates change my dual fuel and electric heat rates?
There is no change to the dual fuel and electric heating rates.
Will the new rates change the cost of my security light?
Security light rate changes have also been reviewed as part of the cost-of-service study and rate analysis. Metered security lights will increase 75 cents per-month, and un-metered security lights will increase 50 cents permonth.
Why were some of the rate structures also changed?
As part of the rate structure analysis, it was determined that the cooperative’s fixed monthly service charges were inadequate to cover the cooperative’s fixed costs to provide service. Synonymous with a basic charge for cable, cellular or phone service, a proper monthly service charge should cover the cost of providing service to your meter, regardless of the amount of usage. A side benefit of moving closer to a proper fixed charge is that many of the rates were streamlined, resulting in a single kilowatt-hour and demand rate in many cases, greatly simplifying the calculation and verification of your monthly electric bill.
What is the effective date of the new rates and when will I see this refl ected on my bill?
The new rates will be effective with your October billing. Accordingly, the new rate levels will be reflected on the electric bill you receive in early November.
Will commercial rates increase or is this applicable only to residential rates?
The cost-of-service study offers a comprehensive review of all rates to ensure that each member regardless of rate classification pays his or her fair share. Each member class should pay its fair share of costs without having one class subsidizing another. Please refer to your copy of the new rate schedule for revised commercial rates that has been mailed to you.
Each year capital credits are returned to members. Can Capital Electric keep those funds instead of increasing rates?
Capital Electric is a not-for-profit electric cooperative. Our not-forprofit status mandates net margins (profits) made by the cooperative must be allocated to the membership in the form of capital credits. Over time, these capital credits are paid back to the members in the form of capital credit retirements. In fact, over the last 10 years, Capital Electric has returned $10.8 million of capital credits back to its members.
What is Capital Electric doing to keep costs down?
• We are managing our power supply contracts. For each dollar collected, nearly 71 percent goes to the cost of purchasing electricity to meet the needs of our members;
• We are implementing beneficial technology, such as our outage management system and advanced metering infrastructure, to help control costs, provide additional efficiencies and increase reliability;
• We are competitively bidding contractors and materials to ensure quality service at the best possible price; and
• We are performing an ongoing evaluation of our day-to-day operations for opportunities to improve and gain efficiencies. As previously mentioned, Capital Electric consistently ranks in the lowest 5 percent of more than 800 electric cooperatives in controllable costs per-consumer.
I understand that Capital Electric has a program to help those in need in the community. Are my rates being increased to support this program?
The Capital Electric Charitable Trust has helped those in need throughout our service territory. The funds to support this program are not included in overall electric rates. In fact, this program is funded by the generosity of our members who contribute to our Operation Round Up program by allowing their electric bill to be rounded up to the next whole dollar amount each month.
Are copies of the rate schedule available?
Yes. In fact, a separate mailing will be sent to all members during the last week of August. Members may also obtain a copy of their new rate schedule by contacting our office at 701-223-1513 or visiting us at Capital Electric’s office at 4111 State St., Bismarck.
What can be done to reduce my electricity costs and can Capital Electric provide assistance in this area?
Your cooperative offers a number of programs that can reduce your electricity costs.
• Members are encouraged to investigate residential heating options, which may off er savings to consumers presently heating with less-efficient technology. Our off -peak electric heating rate of 4.2 cents per kilowatthour is equal to 99-cent propane, assuming a 90-percent efficiency rating, and doesn’t have a history of volatile pricing that is inherent with natural gas and propane.
• The Capital Electric load controlled water heater program provides up to a $5 credit per month.
• Members who participate in Capital Electric’s prepaid billing program average 12-percent reductions in their monthly usage.
• Capital Electric off ers a home weatherization and high efficiency air conditioner and electric heating system loan program.
• Visit our website at www.capitalelec.com for more helpful information about conserving energy.
• Contact Josh or Doug in our member services department for additional information.
Capital Electric is currently considering the possibility of a member incentive rate for those members that are willing and able to assist us with load factor improvement. There are many things you can do around your home or business to help us reduce our peak demand, which drives our wholesale electric costs. Stay tuned for more information, as this is a priority item at CEC.