Ashley-Chicot Electric Cooperative Proposes Rate Changes

Ashley-Chicot Electric Cooperative is your local member-owned electric energy provider. The Cooperative’s purpose is not to make profits for shareholders but to provide you, the member-owners, with the most reliable electric service at the lowest cost possible. This is done through your locally-elected board of directors who set policy, budgets, and make decisions to oversee the operation of the business. A rate adjustment is not a decision that your board of directors takes lightly but these types of decisions are necessary to continue to offer the same reliable and safe delivery of electricity to your home, business, or farm.

Because sales have been flat and the costs of doing business have increased, a comprehensive cost of service study and rate analysis was recently completed which indicated an average 4.99 percent rate increase is necessary. The new rate design will result in a $6.81 increase for the average residential user of 1080 kilowatt-hours. The Availability Charge will increase from $16.50 to $21. However, our residential rate is structured so that after purchasing 500 kWh the excess energy is only $0.074 per unit.

Optional Irrigation (Rate 9/Load Controlled) will see an increase in the Service Availability Charge for the four summer months (June through September) from $45 to $75. However, after purchasing the first 300 kWh at $0.19 the excess kWh (June through September) will decrease from $0.10202 to $0.09207. Irrigation (Rate 6) will be very similar but the Horsepower Charge will decrease from $12 to $11.72 per horsepower. In both cases, the user will see an increase in seasons with low usage but will see a decrease in hot dry seasons with higher usage.

Small Commercial (Rate 5) is projected to have an increase in the Service Availability Charge from $22 to $35. The first 1000 kWh will increase from $0.10121 to $0.11132. The excess kWh will actually decrease from $0.08121 to $0.07814. A new Medium Commercial Service Rate (Rate 10) will be implemented for some commercial, agricultural, and recreational facilities. It will also have a $35 availability charge, $0.06929 for all kWh and a $5 Demand Charge per KW.

There are two primary cost components in providing electric service:

1. Wholesale power which is the electricity that the Cooperative must purchase from our power generation supplier, which is then transmitted to Ashley-Chicot Electric Cooperative substations.

2. Distribution costs are the expenses incurred in delivering the electricity from the substations to you, the end-user. Distribution costs include such things as the materials to build and replace lines, poles, wire and transformers. These costs also include maintenance items such as right-of-way tree trimming, substation equipment, storm restoration and operational upgrades associated with providing dependable power. Distribution costs are generally fixed costs that must be paid whether or not any kilowatt-hours are sold.

The proposed rate adjustment is required to compensate for these rising costs. Ashley-Chicot Electric Cooperative has not had a rate increase solely to offset distribution costs in many years. Any increases have been to adjust for increased wholesale power costs, especially in the past 10 years. Needless to say, almost everything is more expensive now than it was over a decade ago.

We strive to provide safe, reliable and affordable power to our membership. Like most rural electric cooperatives, we have the disadvantage of a low account density contrasted with the many miles of line we serve. Even with this challenge your cooperative has kept competitive rates at or below the national average. This will still be the case even with the proposed rate change.

The principle on which Ashley-Chicot Electric Cooperative was founded– to serve our local communities with reliable power at the lowest possible costs – is just as strong today as it was when we opened our doors almost 80 years ago. The board of directors and employees of Ashley-Chicot Electric Cooperative are committed to diligently serving our members. As members, you do more than trust us to provide the energy you need – you count on us.

Please give me a call at 870-853-5212 if you have any questions or concerns.

Rodney Chapman
General Manager
Ashley-Chicot Electric Cooperative, Inc.