Rappahannock Electric Cooperative
REC Seeks Approval to Implement Next Phase of Rate Transition Plan
For members in areas formerly served by Allegheny Power
Rappahannock Electric Cooperative (REC) filed a plan today with the State Corporation Commission (SCC) to move, over a three-year period, its customers in the geographic areas formerly served by Allegheny Power to the rates on which all other Cooperative members are billed.
REC's plan is the next step in the multi-year schedule that the SCC established to protect consumers when it approved REC's acquisition of a portion of the Virginia distribution assets of Allegheny Power effective June 1, 2010. REC's plan conforms to the key consumer protection measure directed by the SCC that a "typical" consumer using 1,000 kWh of electricity per month would experience no more than a 5% annual adjustment in their bills starting July 2014. If approved by the SCC, the plan would gradually increase members' bills in the area formerly served by Allegheny Power (referred to as "new territory") to the point they would be cost-based and match the bills of other REC members by 2017.
For a typical new territory residential household using 1,000 kWh per month, the proposed increase beginning in July 2014 will be approximately $5 per month, with a comparable adjustment in July 2015 and 2016.
The plan includes billing the new territory members based on the full REC cost-based rates and applying a credit on their bills to ensure that the increase each year is no more than the limit set by the SCC.
According to Kent D. Farmer, REC's President and CEO, "We recognize that any rate increase is difficult for our members, but we are proud that we have been able to keep rates lower than projected when the acquisition was approved back in 2010. For example, during the first three years we have served these new REC members, lower wholesale power costs have kept typical residential member bills $8 less per month than expected." Farmer further noted, "This application by REC is a necessary next step and complies with the Commission's Acquisition Order that was carefully crafted to provide rate stability during the transition period."
Farmer further explained that the REC members in the new territory have benefited from numerous initiatives over the past three years to bring this acquired area up to REC standards.
These include increased reliability, faster power restoration after outages, increased customer service options, consistent billing periods, and an expanded focus on clearing vegetation in rights of way. In addition, since REC is a not-for-profit business, these new members are now earning equity in their cooperative and have begun receiving capital credits.
"REC has also presented evidence to the Commission in this filing that would in normal times support a rate increase for all of its members, largely as a result of the rising costs of doing business and lower growth than usual during the recent economic downturn." Farmer continued, "Our Board and management team however have decided that these are not normal times, and the Cooperative will hold the line on its base rates and continue to do all it can over the next several years to improve operating efficiencies, achieve additional economies of scale, and hopefully realize growth greater than experienced in recent years."
The process to secure approval of the plan at the SCC will take several months, and the plan will not be implemented until July 2014.
Throughout the rate transition process, Rappahannock will use multiple resources and communication channels to guide and inform members. Those channels will include email, print publications, REC's website, social media and phone interaction with the Cooperative's member services personnel. REC provides electric service to over 157,000 connections in parts of 22 Virginia counties.
With its general office in Fredericksburg, Va., Rappahannock operates and maintains more than 16,000 miles of power lines through its service area, which ranges from the Blue Ridge Mountains to the tidal waters of the Chesapeake Bay. For information about REC, please visit us on Facebook or our website, www.myrec.coop.