Proposed Rate Increase FAQs

For the average residential consumer, this could result in an approximate monthly bill increase of $5-$9.

SDCEA has proposed two rate restructures in the past two years. These proposals aimed to allocate expenses more fairly across different rate classes. Neither plan would have generated additional revenue for the cooperative, and both plans were rescinded by the board of directors.

This time, SDCEA needs a general rate increase to generate additional revenue to strengthen our cooperative’s finances and effectively cover costs. This increase will be applied to all SDCEA rate classes.

SDCEA follows a cost-of-service approach when determining its rates. This means that the cooperative calculates the cost of delivering electricity to its members, including expenses such as infrastructure maintenance, operating costs, and power supply. These costs are then divided among the members. Part of the costs are recovered through the Service Availability Charge and part of the costs are recovered through kilowatt hour sales.

Our region’s mild climate limits power sales, but our responsibility for maintaining the power infrastructure still incurs significant costs. With a lack of substantial industry in the area, we also face additional challenges in that higher power users do not help offset these costs.

No. There are several cooperatives that have higher service availability charges and/or different rate structures that are higher than SDCEA’s.

Electric utility rates are determined by numerous factors including infrastructure costs, operating expenses, sales and purchased power costs. These are factors unique to each cooperative. SDCEA is committed to keeping our rates as low as possible while maintaining reliable service for our members.

The proposed implementation date for the new rate is February 1, 2024. We are publishing this information to ensure our members are adequately informed of this change ahead of time.

SDCEA plans to review rates annually. While we cannot predict the future, we can assure you that any decisions about rate adjustments will be made with the utmost care, considering our mission to provide reliable and affordable electricity to our members.

SDCEA has been able to maintain the same rates since 2017 through careful fiscal management, efficient operations, and strategic investments.

Two decreases in power cost from our power provider Tri-State, growth in our membership and in kilowatt hour sales has also allowed us to hold rates steady.

Revenue requirement projects are forecasting that our growth is no longer sufficient to keep up with inflationary pressures.

You are welcome to call our office to discuss your situation if you’d like.

Another option is checking out 211colorado.org or dialing 211. This can get you in touch with programs in your area for aid, matching by your zip code.

You may also be eligible for the Colorado Low-income Energy Assistance Program (LEAP). Leap is a federally funded program that helps eligible Colorado families, seniors and individuals pay a portion of their winter home heating costs.

The LEAP program works to keep our communities warm during the winter (November through April) by providing assistance with heating costs, equipment repair and/or replacement of inoperable heating tools. While the program is not intended to pay the entire cost of home heating, it aims to help alleviate some of the burdens that come with Colorado’s colder months.

Other benefits provided by LEAP include repair or replacement of a home’s primary heating system, such as a furnace or wood-burning stove. The program does not provide financial assistance for any type of temporary or portable heating.

To access the LEAP application and apply for the program, visit www.colorado.gov/cdhs/LEAP. You may also call the HEAT HELP line at 1-866-HEAT-HELP ((866)-432-8435) to receive an application via mail or email.

SDCEA needs to cover the costs of doing business and produce moderate margins (profits) above those costs to maintain operations. Margins allow the cooperative to invest in infrastructure improvements and is an important criterion for our lenders to see that we can pay our loans. SDCEA relies heavily on outside financing to fund the millions of dollars necessary to complete our work plans.

SDCEA will need to increase the rate rider for one month only in 2024 – January – from its current $8 to $9.

This is because the rate is in place to increase by $1 in January and we must give 30 days public notice of this rate change reduction to our rate schedule. Public notice of this change will be published in area newspapers in December. Then, if allowed to go into  effect, the assessment will be reduced and remain at $8 February 1, 2024 – December 31, 2024.

Our revenues from the rate rider match what we are spending in mitigation for the next year, so keeping the fee at $8 per month is recommended in the rate schedule changes.

The rate rider is in use 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 a part of or absorbed in to SDCEA’s general operating budget.

Please click here for current and proposed February 2024 rates.

For the average residential consumer, this could result in an approximate monthly bill increase of $5-$9 in 2024. The rate increase will raise the monthly service availability charge for general service residential members from $31.83 per month to $35.01 a month and the energy charge from $0.12944 per kWh to $0.13485.

2017.

The allocation of this rate increase – passing increased service availability costs on to the service availability charge and passing increased costs in wholesale power supply on to the energy charge – is a balanced approach that improves SDCEA’s financial stability.

We are increasing the service availability charge to cover the rising costs of maintaining our infrastructure and operating the company. This includes expenses such as supplies, system maintenance, restoring outages, building maintenance, vehicle upkeep, property taxes, financing, equipment, software, and staff. These expenses are necessary for providing reliable year-round service to all our customers, regardless of how much power our members use, or how often they use power, and these costs have risen steadily in the past few years.

Relying too heavily on increasing the energy charge alone makes SDCEA financially vulnerable, hinging on a cold or long winter to boost power sales to generate the necessary operating revenue to cover our basic operating (fixed) costs.

We have implemented a gradual approach to covering operational costs over the next four years, with a 10 percent increase to the service availability charge annually if necessary. This allows members to prepare for increased costs and avoids a sudden, significant rate hike. In February, we will begin strategic planning to develop rates that best match our members’ future needs.

At SDCEA, we prioritize providing reliable, affordable energy to our members. As an electric cooperative, we have no interest in making large profits. Instead, any excess revenue we receive is allocated to our members in the form of capital credits.

Our goal is to collect just enough funds to cover our operations, meet our debt covenants and reinvest in our infrastructure, rather than over-collect and refund the surplus. We strive to strike a balance between affordability and ensuring the quality of our services.

Electricity usage is not solely determined by income level. In fact, low-income individuals can still be high electricity users under certain circumstances.

Households that are all-electric, less energy-efficient, or heavily rely on electricity for heating, cooling, and appliance usage, are likely to be higher energy consumers.

Households that use less electricity may rely on natural gas or propane to heat their homes and water, or may be part-time residents.

As legislation and SDCEA continue to focus on reducing carbon emissions, there is a growing emphasis on replacing the use of fossil fuels with electricity. This is because many new sources of electricity have low or no carbon emissions.

To facilitate this transition, it is crucial to have attractive electric rates that encourage people to switch to electricity.

This provision was enacted to meet projected revenue requirements. At present, we are relying on deferred revenue (saved funds) to bridge budget gaps. Budgets and revenue requirements are reviewed on a yearly basis. In the event a 10 percent increase is deemed unnecessary, the board will implement a lower percentage increase on an annual basis.

The Service Availability Charge is designed to recover what it costs SDCEA to make electric service available to our consumers to use 24 hours a day, 7 days a week.

This charge covers the costs of maintenance on the system, linemen restoring outages, the fixed costs of our buildings, vehicle maintenance, property taxes, financing, equipment, software and staffing to operate the company. These costs are necessary to make service available on our system – regardless of how much power a consumer uses, or whether they use their power one month a year or 12 months a year. Currently, not all of SDCEA’s fixed costs are covered in the Service Availability Charge. A portion of our fixed costs are recovered in the energy (kWh) charge.

The energy (kWh) charge is the cost of the actual electrons that power your appliances. That energy is measured in kilowatt-hours (kWhs) used at your specific location.