Following a detailed analysis, the WREA Board of Directors approved to restructure WREA’s Residential, Small Commercial and Irrigation rates. The rate restructure includes an increase in the monthly WREA Service Charge and a decrease in the kWh energy charge.
This will result in about a $5.00 per month increase for the average WREA Residential member (750 kWh per month). The WREA monthly service charge for Residential members will increase from $5 per month to $15 per month. The per kWh energy charge will decrease from $0.12/kWh to $0.11/kWh.
As a part of the restructure, WREA divided the Small Commercial rate class into Small Commercial Single-Phase and Small Commercial Three-Phase. Members will be placed in the rate class that corresponds to the electric infrastructure that serves their particular meter. Small Commercial Single-Phase Service Charge will increase from $5 to $15 per month and Small Commercial Three-Phase will increase from $10 to $20 a month. Irrigation Single-Phase Service Charges will increase from $10 per month to $15 per month and Irrigation Three-Phase Service Charge will increase from $10 per month to $20 per month. The energy charge for both Irrigation and Small Commercial classes will decrease to $0.11/kWh.
WREA spent the last two years diving deep into its costs and revenues following the Board’s directive to complete a detailed Cost of Service Study. Cost of Service Studies determine how costs are allocated based upon the service, equipment and infrastructure required to serve each rate class. The Board and management set a goal of achieving contemporary residential/commercial/irrigation rate structures that equitably recover costs.
“This was a lengthy process but it was important that WREA take its time in structuring its rates so that we can meet established financial goals and continue to provide safe, reliable electric service to our members well into the future”, said Alan Michalewicz, WREA’s General Manager. Michalewicz went on to say, “our industry has gone through a lot of changes in the last several years. It was time for WREA to reassess its rates to remain competitive in the energy market and remain true to WREA’s core values of serving our members with safe and reliable power”. Based upon historical consumer data, “the average residential member will see a net increase of about $5.00 per month, but with the decrease in cost of energy some homes may see less of an impact”, said Michalewicz.
The complexities of rate design can be simplified into two basic cost recovery mechanisms; fixed and variable costs. The WREA Service Charge is the fixed cost paid every month per meter. The Service Charge helps to cover the cost to maintain WREA’s system which includes infrastructure, service and operations. Fixed Costs include the wires, transformers, poles, technology, customer service and labor. The fixed costs exist regardless of a member’s actual electric use. The energy charge is the Variable Charge which fluctuates depending on how much electricity is used. The energy charge is comprised of wholesale power costs associated with providing members reliable electricity whenever it is needed.
WREA worked diligently to maintain its internal costs over the years with WREA’s Board directing staff to “do more with less” through efficiencies and optimization. Those internal measures have allowed WREA to control its costs while maintaining its standards of excellence even though the general cost of doing business has increased dramatically over the last ten years. WREA’s Service Fee has been $5.00 per month for over twenty years. WREA’s last internal rate increase was in 2013 which was followed by a rate decrease in 2015, year-end bill credits and Power Rebate.
“WREA dug deep; leaving no stone unturned in its assessment of its costs and the best way to equitably recover them. We feel we have met the Board’s goals and are eager to get the message out to our members so they can be prepared for the upcoming changes in our rate structures” said Michalewicz.
WREA’s new rate structure went into effect January 1, 2018. WREA will provide its membership with additional informational in the coming weeks including the formal rate notice (link is external) which was mailed to the membership at the end of November. Please call WREA at 970-878-5041 with additional questions or comments.