Understanding Fair Rates

Sangre de Cristo Electric Association (SDCEA) Works To Keep Your Power Affordable

By Jon Beyer, Chief Executive Officer

SDCEA exists for 1 fundamental purpose: to serve you, our member-owners. This commitment means delivering safe, reliable power exactly when you need it while maintaining the lowest possible rates.

As our area’s population grows, energy is being consumed in new ways and at different times, which is increasing demand and increasing our cost of service. We are committed to helping you manage your electric bill. We’re working hard to control costs and are actively exploring the development of a new rate structure that adapts to these shifts, while ensuring fair cost sharing for all our members.

Learning on Your Behalf

Our board of directors sets cooperative policy and rates and is elected by you to represent your interests at the cooperative. Board members take their responsibility seriously, which is why they’ve committed significant time to understanding the complexities of rate development.

This year, the board’s education rate process began in January with the first of 2 comprehensive cost-of-service sessions.

In July, board members participated in a day-long session focused on the results of this initial study and rate design fundamentals. These weren’t simple presentations but deep dives into power delivery and cost allocation.

The sessions covered three critical areas: how much power our members use collectively and by rate class, the patterns of that usage throughout different times and seasons, and the true cost of maintaining the infrastructure and operations needed to deliver reliable electricity. This knowledge forms the foundation for any future rate discussions.

Moving Forward Together

Rate design — the process of setting SDCEA’s rates — may seem like a technical topic, and we understand it directly affects your household budget and your cooperative’s financial health. By taking time to understand the true costs of electric service and exploring fair ways to allocate those costs, we’re working to ensure we’re keeping your rates as affordable as possible while the cooperative remains strong financially.

Breaking Down Your Electric Bill

Your current monthly bill has 2 main components, each reflecting different aspects of electric service delivery.

Service Availability Charge

The service availability charge funds a large percentage of essential operational expenses or fixed costs that exist regardless of how much electricity you use. Think of this as the cost of having electric service available to your home 24 hours a day, seven days a week. This charge helps fund several critical areas:

1. Infrastructure maintenance and upgrades keep the distribution system in proper working condition. Storms, aging equipment, and growing demand for electricity require constant attention and investment.
2. Operational costs include materials, taxes, and labor necessary for day-to-day operations. From the lineworkers who restore power during outages to the customer service representatives who answer your calls, these human resources are essential to reliable service.
3. Consumer services encompass outage response systems, billing software, and communication tools that keep you informed about your electric service.
4. Regulatory compliance ensures we meet all safety, environmental, and reliability standards required by state and federal agencies.

Each of these cost categories has experienced increases over recent years, and upward cost pressure continues.

Energy Costs (kWh)

The second part of your bill reflects the cost of the electricity you use. This charge includes 2 key components:

1. Energy Consumption – This covers the total electricity you use at your home or business, measured in kilowatt-hours (kWh), to power your lights, appliances, and heating or cooling systems.
2. Demand – This represents the highest amount of electricity used by the entire cooperative at any single moment during the month. This cost is distributed among our membership and is currently included in your kWh (energy) charge.

Why Demand Matters to You

Demand represents a significant cost factor that continues to grow as more members join the cooperative and electrify their homes. Understanding this concept is crucial for appreciating the challenges we face in rate design.

For example, imagine it is the coldest day of the year. Most members may decide to turn up their heat, as well as possibly do laundry, cook, run the dishwasher, and use their computer or charge other electronic items at the same time. Our wholesale supplier must have enough power generation and transmission capacity available to meet that peak demand, and SDCEA must build our distribution system to serve the membership during these times, even though it might only occur for a brief period once per month.

These demand costs get passed along to SDCEA through demand charges from our power provider, Tri-State.

Exploring New Rate Design Options

The board’s educational process aims to identify rate design options that could provide members with more control over their monthly bills while ensuring costs are allocated fairly across the membership.

1 promising approach involves creating rate structures that allow members to help reduce system-wide demand charges. By shifting certain activities to off-peak hours or installing technologies that automatically manage energy usage during peak periods, members could potentially lower their individual bills while helping reduce costs for everyone.

We’re also exploring products and programs that could help reduce individual demand at your home. These might include pricing options that reward members for using electricity when demand is lower, water heater controls, use of heat pumps, smart thermostats, energy-efficient appliances, or other options.

Next Steps

This rate education process will continue for several more months as board members and staff work through complex technical and policy considerations. Comprehensive rate structure changes will not be implemented without member education and transparent communication about any proposed adjustments.

We’re committed to keeping you informed throughout this process. Look for updates in Colorado Country Life magazine, on our social media channels, and through public workshops to be scheduled for this fall. These workshops will provide opportunities for you to ask questions, share concerns, and help shape any potential rate modifications.