Rate restructure FAQs
SDCEA is committed to provide the best possible service to our members and at the least cost needed to provide that service. That’s why we will be phasing in future rate changes that will: (1) itemize the costs to serve our members and re-balance those costs to make the coop more financially stable in the face of rapidly changing internal and external costs, and (2) allow you to take control of your energy consumption and maximize savings on your electric bills in the years ahead.
These rate changes will allow us to continue to provide the same high level of service you expect and depend on to power your homes and businesses.
SDCEA is a member-owned not-for-profit electric cooperative, and that is why we are committed to serving our member-owners well. That means we strive to provide reliable electric service, including rapid response to outages, but also personal care in member services and energy programs. We work every day to control costs while supplying reliable, affordable electricity to our members who depend on this essential service. Costs to operate the cooperative are shared among all members in the most equitable way possible.
While SDCEA has not raised rates since 2017, materials and labor costs have increased. We must also continue to maintain and improve the infrastructure of our electric system to assure reliability. Wholesale power-supply prices to SDCEA are not constant, but vary based on off-peak and on-peak times when lesser or greater amounts of power are consumed.
Since 2020, SDCEA has been performing a review to determine if the current rates meet the objective of recovering the costs of doing business, treating members fairly, and encouraging member behavior that helps accomplish cooperative/public policy objectives.
From this review, we have determined that some changes to rates are needed. We want to alert and inform our members to these anticipated changes, which are expected to occur in 3 phases. These phases include:
- Phase 1 – Rate Restructure (Itemization of costs to be shown on bills & introduction of innovative member-choice rates)
- Phase 2 – Update of Cost of Service (COS) (the last COS was based on 2019 and costs have escalated significantly in the 3 years since)
- Phase 3 – Updated Rate Review (To be informed by the new COS)
Phase 1 changes are being considered by the SDCEA Board to be implemented in 2023. These changes are focused on: (1) a simple itemization of costs to be shown on member’s bills, (2) an increase in SDCEA’s Service Availability charge to cover basic fixed costs, and (3) rollout of introductory member-choice rates which provide members with the opportunity to better manage their electricity use and save money.
SDCEA will offer an introductory pilot program for members who would like to save on their electricity bills by taking part in our new Time of Use rate, where the cost per kWh varies based on when electricity is used. This is a voluntary rate – our members must elect to opt-in to it, limited to 300 new accounts.
Through this initiative, and a future plan for an energy demand rate, SDCEA is encouraging customers to shift as much electric usage as possible to times with lower power demands – encouraging smarter consumption that can lead to more savings on your bill. Education initiatives will also be offered to help members better understand how taking advantage of off-peak hours can benefit them financially.[/ux_text]
In 2020-2021 SDCEA performed a Cost-of-Service Study (COS), which showed us whether each member class rates (residential, three-phase, and large power, for example) are adequately covering the costs of service, fuel, labor, equipment, etc. to serve those members. Based on the results of the study, we are restructuring rates to distribute costs more equitably to our members. Several factors went into this decision.
- To continue to fulfill our mission: To safely provide reliable electricity and services to sufficiently power the lives of our members and our communities.
- Ensure rates are sufficient to cover the costs of operations: SDCEA invests millions of dollars into the electric system through our construction work plan, which improves our system reliability for all members.
- To treat members fairly: SDCEA’s rate change does not significantly impact the cooperative’s total revenue and is designed to more equitably balance rates charged among various rate classes.
- Restructuring our rates will also mitigate the impact of the weather on collecting sufficient revenue to cover SDCEA’s costs when electricity sales fluctuate due to unpredictable weather patterns.
- Begin to decrease the amount of power purchased during peak-energy cost time periods: This saves members and the cooperative money on our power bills and helps give our members choices and better control over how much the cost is to run their home or business. It also encourages wise energy use and carbon reduction.
SDCEA’s board of directors will consider the restructuring of rates at its monthly meeting, March 29, 2023. If approved, the new rates will be reflected on the June 2023 electric cooperative’s bills.
To help protect and sustain local communities by helping to avoid a catastrophic wildfire, the SDCEA Board of Directors approved a monthly wildfire mitigation rate rider on SDCEA monthly bills, beginning in 2021.
While the charge may have raised the total amount of your bill, the rate rider will be used for a limited time and for the specific and necessary purpose of accelerated funding of vegetation removal to mitigate the threat of wildfires on our system. Funding raised through this rider is used only for wildfire mitigation and is not part of SDCEA’s general operating budget. Rate riders are charged outside of general rates.
Once mitigation is completed, the rate rider will be removed from member bills.
Included in the proposed residential rates, which make up most of our services, the price of energy per kWh and delivery will decrease from $0.12944 to $0.10808 per kWh but will be itemized as $0.04500 per kWh of energy and $0.06308 in distribution charge.
For residential accounts, the Service Availability Charge will change from $31.83 to $46.15 per month.
The Service Availability Charge is a fixed charge designed to cover the basic monthly costs of providing electricity to your home or business. It covers ongoing maintenance on the electric system; line workers restoring outages; poles; lines; technological and delivery improvements; maintaining our substations (substations regulate voltage levels from transmission power lines that are then transmitted by distribution lines to individual members); the cost of our buildings; vehicle maintenance; property taxes; financing; equipment; software; billing; customer service and staffing to operate the company.
If the rate change is approved, new rate options will also be available to provide member choice and opportunities for members to save money on their bills. For more information on your specific rate options, sign in or create an account to sign in.
The rate restructure will result in bill decreases for some members, increases for others. SDCEA’s rate change does not significantly impact the cooperative’s total revenue and is designed to more equitably balance rates charged among various rate classes.
The effect of the rate change on individual members will vary depending on the class of service and the amount of electricity used.
For those who would like to see the impact of the changes on their personal or business bill, as well as comparisons to other rate options, SDCEA has produced comparisons of charges from 2022 to the proposed 2023 rate, specific to each member on our system.
The quickest way to access your bill comparison at any time is to log into or create an account using the white box online at our home page, myelectric.coop. Sign in or create an account to sign in.
Once logged in to your account through SmartHub, go to the Profile tab option and select Documents on the drop-down menu. Click on the 2023 Rate Comparison sheet & cover letter for information.
Members may also request SDCEA to email or mail your report. To do that, please go to our rate website, sdceaadvisory.com, and submit your request for the comparison sheet or call the office. Requests will be processed in the order they are received. Information submitted must match our account records.
You may. For those who would like to see the impact of the changes on their personal or business bill, as well as comparisons to other rate options, SDCEA has produced comparisons of charges from 2022 to the proposed 2023 rate, specific to each member on our system.
Proposed new rates include:
Time of Use rate
If approved in March, this rate will be available to the first 300 members who opt-in to it.
The Time of Use rate potentially benefits the member who can control or alter their energy use patterns to ensure they use less energy during SDCEA’s on-peak time between the hours of 5-10 p.m. Monday-Saturday. This period is when energy is more in demand and more expensive since SDCEA is charged more for electricity by our wholesale power supplier.
Members who opt for this rate may be able a significant amount on their distribution services costs if they are willing to be very vigilant about not using electricity during peak hours. Off-peak hours are charged at a much lower rate.
The TOU rate may be an excellent choice for members with electric vehicles who can charge during off-peak hours between 10 p.m. and 5 p.m. the following day. Members may save money on this rate by managing when they use electric appliances.
Optional, opt-in enrollment in this program will be limited to the first 300 members who sign up for it.
SDCEA will study the pilot program to review the sufficiency of our meter reading and billing capabilities. We also wish to measure the degree of member behavior changes under the new rate.
Please also note: Time of Use rates may change, based on the results of the pilot study.
Energy Time-of Day Demand Rate
The Energy Time-of Day Demand Rate is planned to be available by the fourth quarter of 2023.
Demand is the maximum amount of power needed to supply every electrical device running in your home or business at a specific point in time.
One way to describe Demand is to look at electric use like Internet service use. When one person streams a movie or television show on one device in your home, the stream works great. But as additional people in your house attempt to stream videos simultaneously, more bandwidth is needed to ensure the stream works well. Think of electric use in a comparable manner. As more appliances in your home run simultaneously, such as your washing machine, stove and dishwasher, your demand for power increases.
Members can benefit from the new demand rate if you can avoid or space out simultaneous use of large appliances during on-peak times, or the hours of 5-10 p.m. Monday-Saturday.
For example, during the peak period, if you are washing clothes, do not run the dishwasher at the same time. Or if you are cooking on the stove, hold off on putting a load of clothes in the dryer. Spreading out the use of these items will help lower your Demand Rate.
The best tool to help you monitor your energy use is through the free SmartHub app. The app can be found in the Google Play or the Apple Store. Simply search for SmartHub. You can also be directed to SmartHub by going to myelectric.coop and clicking on the account sign in tabs on the homepage.
If you want to stay with your current rate schedule, you do not need to take further action. The new rates will take effect in June.
Please go to our rate website sdceaadvisory.com, and fill out the Time of Use pilot program request for information form.
Beneficial Electrification is replacing or partially replacing vehicles, equipment, appliances, and space heating or water heating that run on fossil fuels as is possible to ones that primarily use electricity to operate and can save consumers money and/or reduce their environmental impact.
Specific examples of beneficial electrification include the use of heat pumps in new construction or to replace other heating systems that are at the end of their lifespan. Electric vehicles or plug-in hybrids and swapping gas kitchen appliances for electric appliances also fall into this category.
To learn more about national Beneficial Electrification initiatives, research, and investments, visit the Beneficial Electrification League (BEL) website.
The rate change will result in bill decreases for some members, increases for others. The effect of the rate change on individual members will vary depending on the class of service and the amount of electricity used.
SDCEA’s rate change does not significantly impact the cooperative’s total revenue and is designed to more equitably balance rates charged among various rate classes.
For members who need assistance in paying their electric bills, the Colorado Low-income Energy Assistance Program (LEAP) is available to help families, seniors, and individuals in need of home heating assistance this winter. Funded by the federal government, LEAP works to keep Colorado residents warm from November through April by helping with costs associated with heating, equipment repair, and/or replacement of heating tools.
SDCEA does not income qualify our members, but we do have members that are qualified by other agencies for bill pay assistance through LEAP. We reviewed information pertaining to members who received assistance during the previous two heating seasons and to date this heating season as our low-income members for the analysis below. This sample clearly does not represent all of our low-income members, but it is a representative and certified sample.
When averaging the data across the last three years (2020 – 2022):
76% of our low-income members would experience a reduction in their electric bills under the new rate structure. The average maximum monthly savings for an individual member would be $46.83 and the average monthly savings across all 76% of low-income members would be $14.45. The average maximum monthly increase for an individual member would be $8.87 and the average monthly increase across the 24% of low-income members would be $3.48.
When averaging the data this past year (2022):
73% of our low-income members would experience a reduction in their electric bills under the new rate structure. The average maximum monthly savings for an individual member would be $72.28 and the average monthly savings across all 73% of low-income members would be $15.40. The average maximum monthly increase for an individual member would be $4.77 and the average monthly increase across the 27% of low-income members would be $2.50.
Those interested in LEAP can find out if they are eligible and get more details about the program at https://cdhs.colorado.gov/leap. Members may also contact SDCEA for more information.
Energy Outreach Colorado (EOC) is another organization offering aid for those who need help with their electric bills. SDCEA contributes annually to help fund this organization. For more information on EOC, please access energyoutreach.org online.
The SDCEA member-elected Board of Directors and senior leadership continuously monitor the financial standing of the cooperative and our rate structure. In 2019, the Board of Directors chose to review rate structures and costs to best serve members of the cooperative and hired outside expertise to perform the analysis and make rate recommendations based on current industry and regulatory standards.
Power System Engineering (PSE), a nationally recognized, independent firm with experience working with electric cooperatives throughout the country, conducted a cost-of-service study (COS) in (2020-21) to evaluate our existing costs and estimate our total operating costs in coming years. The costs are allocated based on consumer classifications such as residential, commercial, and industrial to determine the type of service, equipment, infrastructure, and the capacity required to provide service to our membership.
In collaboration with PSE and staff, the Board of Directors explored rate designs that will better recover SDCEA’s fixed and power supply costs and save members and the cooperative money in the future.
We will continue to review our costs and rates, and work with PSE in the future to determine the most balanced rates and innovative rate options going forward to best serve our members’ needs.
For further cost of service study information:
As a not-for-profit electric cooperative, we allocate our excess revenue back to our members (ratepayers), which happens in the form of Capital Credits. Our margins are not going towards bonuses or dividends to shareholders.
SDCEA’s rate change does not significantly impact the cooperative’s total revenue and is designed to more equitably balance rates charged among various rate classes.
We will gladly take your comments on the rate restructure. Please email: SDCEArates@myelectric.coop.
Comments will be forwarded to staff and the board of directors at SDCEA for review and will be recorded in your member account.
SDCEA would like to, but may not be able to, respond to each comment received.
General home energy savings tips can be found here: https://www.myelectric.coop/energy-efficiency/energy-savings-guides/
For Rebate and Inflation Reduction Act information, click here:
This money was awarded to SDCEA as a loan, not a grant. It is part of the standard financing of SDCEA’s infrastructure.
SDCEA may borrow the $26,841,000 over the next 6 years, if SDCEA meets the requirements outlined by the loan agreement. SDCEA was awarded access to a $26,841,000 in loan funds over the next 6 years to pay for infrastructure outlined in the cooperatives 6 year work plan.
SDCEA staff worked with the engineering firm, Toth and Associates, to develop the work plan. Toth and Associates analyzes past and projected performance of SDCEA’s system and determines the construction that will be required to provide adequate and reliable electric service to the system’s new and existing members while considering environmental compatibility and system economics.
The loan funds can only be used for the projects approved by the Rural Utility Services that are outlined in the work plan. Loan terms for borrowing are determined when funding for workplan projects are needed and are normally a 30-year fixed rate agreement.
SDCEA has hired Power System’s Engineering to update our cost of service study to analyze if and/or when the additional debt could impact rates. Fortunately, borrowing from the USDA allows SDCEA to get the lowest interest rates available for the large capital expenditures outlined in the work plan. SDCEA staff and board of directors are always looking at the best way to build and maintain our electric infrastructure to continue to provide safe, reliable electric service to our membership while being fiscally responsible to keep our rates as low as possible.
Trout Creek Solar, south of Buena Vista.