by Rick Lemonds, president & CEO of South Central Power Company
As the CEO of your electric cooperative, I wanted to personally address the upcoming changes in our rate structures that you will see outlined in more detail in the next two pages of this issue, as well as on our website, southcentralpower.com. Rate adjustments are decisions that your cooperative leadership never takes lightly. We understand the burden that any increase places on you, and we know that costs across the board for nearly everything keep rising.
As an electric cooperative, we are not immune to these same rising costs, and inflation is a primary driver behind the need for this increase. Read this article to see a graphic illustrating how the cost of everyday items we need to keep your power on has risen dramatically over the past few years.
What may not be as obvious is the fact that increasingly, we recognize the need to recover more costs through fixed charges. This is important to secure the financial stability of your cooperative, and we also know it is the most fair and equitable way to recover expenses beyond the purchase of power and the costs we must pay to other utilities to move that power over long distances before we can eventually deliver it to your home. While we know that any increase will be painful, we hope that you understand that this type of adjustment will mean a predictable increase that won’t cause your bill to vary as widely with seasonal weather changes and other factors that are outside of the control of you, as members, and your cooperative leaders as well.
We have made every effort to keep this increase as minimal as possible. Since 2020, our rates have risen by 6%. While any increase might seem significant, it’s critical to understand this in the context of the overall economy. During that same time frame, the rate of inflation has been much higher. This means that, compared to most goods and services, electricity continues to be a relative bargain. For example, over that same time frame, according to the Bureau of Labor Statistics (BLS), the cost of groceries has risen more than 23%.
We’re continually looking for ways to improve our efficiency and keep your costs down. We’re investing in new technologies and infrastructure that will help us deliver power more cost-effectively in the future. And we continue to push for policies and practices that make the most of our existing resources and secure reliable and affordable sources of power.
South Central Power is a not-for-profit cooperative, with our principal goal being the delivery of dependable energy to you at the lowest possible cost. The funds collected from our rates are only to cover the costs of procuring and distributing power, and a relatively small operating margin we require to ensure the financial health of the cooperative. Our business practice has been, and we intend to continue, returning any excess margins to you as capital credit retirements after a period of years.
I understand the burden such increases can impose and empathize with the challenges our members face. However, for the financial stability of our cooperative, especially during times of lower-than-expected sales, this decision is unavoidable. But, by aligning the consumer charge more closely with the real cost of delivering your electricity, we aim to weather the changes in the energy industry and continue delivering the reliable power that you rely on.
It’s worth noting that even after this change, most of your bill is based on the amount of power you use. I encourage you to explore methods to decrease your bill by making minor adjustments at home.
From the February 2024 issue of Ohio Cooperative Living.