Rate Concerns
Mor-Gran-Sou members to see a rate increase in January 2008
On Jan. 1, 2008, Mor-Gran-Sou will implement a rate adjustment. We value you as a member and place a strong emphasis on providing you with exceptional service. To maintain the quality, reliability and integrity of the services we provide, it is necessary for us to adjust our rates.
This rate adjustment is based on numerous factors; the largest of which is purchased power. As we have been reporting, Mor-Gran-Sou will see an increase in its wholesale power costs from both Western Area Power Administration (Western) and Basin Electric Power Cooperative (Basin) in 2008. And, looking long range, both entities are predicting incremental power cost increases over the next 10 years.
Western, which delivers federal hydropower within our region, reported that because of the incredible drought, it must purchase additional power to fulfill its obligations. These purchases continue to incur additional deficits, requiring Western to raise rates to meet repayment requirements. A rate increase is to be implemented in January 2008 and remain in effect through December 2012.
Basin, which provides coal-fired generation, will also be passing a rate increase on to its members in 2008. This increase is being driven by growth in the region and an increase in consumers’ demand for more energy. Growth is good for the region, but with growth comes the responsibility of building power plants to serve that growing need for energy.
Because of the need for new construction, Mor-Gran-Sou, like all members of Basin Electric, will see an increase in its wholesale power rates. As we look long range, your cooperative will see its wholesale power rate increase annually until the year 2014.
The challenges we faced in the past three years, including the rising costs associated with inflation, debt recovery and rising power supply costs, continue to plague our everyday operations. While rate adjustments are never easy, as our member-owners, we must ask you to share in these costs.
So how will the rate increase affect you? All cooperative members, including General Service 1A and 1B and General Service 2A and 3A, will see an adjustment in both the monthly base charge and in the kilowatt-hour (kWh) usage charge.
Those members billed on the General Service 1A and 1B schedules will see an 8 to 9 percent increase in their electric bill. For example: A member who is billed under the General Service 1A rate schedule using 1,000 kWh/month will see a $9.82 increase in his or her monthly bill. A member billed under the General Service 2B schedule using 750 kWh/month will see a $6.54 increase in his or her monthly bill. Members billed on the General Service 2A schedule will see a 9.5 percent increase in their electric bill, and members billed under the General Service 3A schedule will see an 11.5 percent increase. Please see the rate schedule to the left for clarification.
Another adjustment to the current rate schedule includes a modification to the electric heat rate. The current separately metered electric rate of $0.04/kWh will increase to $0.045/kWh starting Jan. 1, 2008. This rate is available annually from October 1 to April 30 to members who have a second meter for their electric heat usage.
Finally, with the installation of the Automated Meter Reading (AMR) system, members’ bills will now reflect a more current usage pattern. If you recall, Mor-Gran-Sou transitioned from a 45-day payment cycle to a 15-day payment cycle by adding five more days to each billing cycle. This billing transition began in July 2007 and will be completed in December. Starting in January, Mor-Gran-Sou will read meters on the 1st, send bills out on the 5th and expect payment by the 20th. Exception that may affect the billing cycle include weekends or holidays. Members can expect Mor-Gran-Sou to began that certain process one day prior to the 5th or the 20th date.
Although we must raise our rates to cover the cost of doing business, we are committed to ensuring this occurrence has the smallest possible impact on you. We want to reassure you that Mor-Gran-Sou will remain proactive in planning for your future energy needs. The management alliance between Oliver-Mercer Electric, Slope Electric and Mor-Gran-Sou and the use of the Automated Meter Reading (AMR) system are just two creative examples of how your cooperative looks toward the future needs of you, the member-owner. We will only begin to realize the benefits of both of those decisions as things unfold.
Let me say in closing that we appreciate your loyalty to Mor-Gran-Sou and care about you as a member. Your directors, management and staff, who are committed to providing affordable, reliable energy and services, remain steadfast in their dedication to present and future members. Your cooperative will be diligent in exploring other avenues to control future costs to the cooperative. As always, we welcome your questions, comments or concerns.
So what is Mor-Gran-Sou doing to hold down rates? Your co-op has invested in technology that makes us more productive and efficient – which in turn saves members like you money. The installation of the the Automated Meter Reading system, for all residential members, has been completed. Also, the management alliance with Slope Electric and Oliver-Mercer Electric is now a reality. We also continue to monitor our daily business activities and look for ways to reduce costs. We have recently made a change to our Contribution in Aid of Construction, which is a non-refundable up-front payment for the costs associated with the line extension. As our costs continue to rise, we are asking our members to help share in those costs. This practice may alleviate a portion of debt service that is recovered through a rate adjustment. These are just a few examples of our efforts in managing rate adjustments.
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