Board attends rate workshop

SDCEA board workshop summary, January 8, 2025

SDCEA is a not-for-profit electric cooperative. The bill a member receives from SDCEA reflects the costs involved in purchasing electricity, distributing it to your home or business, and maintaining the infrastructure needed to provide reliable service.

These costs are broken down into components, such as power-supply costs which include charges for energy usage (measured in kilowatt-hours), fixed costs for administration and maintenance of the electric system (the service availability charge), and any additional fees for services or programs, (such as wildfire mitigation).

SDCEA’s goal is to ensure that the rates you pay closely align with the actual costs of providing energy and operating the system. If the cooperative exceeds the revenue needed for operation, SDCEA is obligated to allocate that excess amount to members as capital credits. Information on capital credits may be found here (link to capital credit information page).

Members of SDCEA’s board of directors attended a workshop on January 8 to learn the results of a review of the cooperative’s rates – a revenue-requirement and preliminary cost-of-service study, conducted by GDS Associates, Inc., SDCEA’s rate consulting firm. Conducting reviews like the one presented at this workshop is considered the best practice for an electric cooperative to assess whether the rates charged accurately reflect actual costs.

GDS was hired in the summer of 2024 to evaluate SDCEA’s expenses and existing rate structure. Their goal is to determine whether updates to the current rates may be required to address shifts in energy-supply and operations costs, and member-consumer power usage. Staff at the cooperative have been working with the firm to supply data for the study for this purpose over the past six months.

A revenue-requirement study calculates how much money SDCEA needs to cover all power supply and operating costs, including meeting margin requirements to meet debt covenants. This study helps ensure that the organization’s rates can meet its financial obligations and operate effectively.

The finding of the GDS study is that SDCEA’s current rates will collect adequate revenue at this time to meet those obligations and that no further rate increases will be necessary in 2025.

Over the next few months, GDS will perform a more in-depth cost-of-service study to analyze the expenses SDCEA incurs in providing power to all the cooperative’s rate classes, such as residential, commercial, and large-power users. This review will assess whether the charges assigned to each group accurately reflect the actual costs of supplying power to them. This process will help the board consider how to best distribute costs and develop future rates.

This summary of information about this workshop highlights SDCEA’s commitment to transparency as we carefully evaluate long-term electricity rates for our region. While no rate changes are being implemented currently, we are conducting a thorough review of existing rates to ensure SDCEA meets future operations costs and supports changing member use needs. SDCEA is governed by a board of directors elected from the membership, who ultimately would vote on any rate changes prior to implementation. Members will be informed throughout the review process and will have opportunities to provide input on potential future rate proposals. If you have any questions, please email rates@myelectric.coop.

For a link to SDCEA’s current rates and service availability charges, please click here.

July 2025 update: To read about initial results of the study, please click here.