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Manager's Message
Rate adjustment on the horizon
RATES
Your Board of Directors and management have been discussing rates for nearly two years and now it's time to act.
As of January 2010 the wholesale power cost from Basin Electric Cooperative will increase 11.8% while, at the same time, the wholesale power cost from Western Area Power Administration (Western) will increase 13.39%. What these increases mean for the membership of McKenzie Electric Cooperative is a definite rate adjustment in the immediate future.
The particulars of the rate adjustment are yet to be determined as we are working to provide our consultant the most recent data necessary to create an appropriate rate structure. All members should expect a rate adjustment sometime within the first quarter of 2010 or shortly thereafter.
Some important items to note:
• McKenzie Electric's last general rate increase was in 1991 - there aren't too many products or services you can say that about! This also tells you that we provide good value for your dollar.
• Western has had a rate increase of one sort or another each of the past few years;
• Western's primary reason for the rate increase is to cover its cost of purchasing power on the open market as a result of less generation due to drought.
• Basin has increased its rates each of the past two years;
• Basin is in a capital intensive construction phase and is building new coal generation; building new wind generation and upgrading existing facilities to address environmental issues to name a few.
• McKenzie Electric hasn't increased its rates with recent wholesale power increases due to the fact that there has been steady residential and commercial growth in those years. Growth comes in the form of an increase in meters and sales. This growth has allowed MEC to spread its fixed costs over a wider membership base which effectively minimizes the impact of wholesale power increases.
• For 2010, excluding wholesale power cost increases and depreciation increases due to capital additions, MEC's total expenses will increase only 0.98%. For 2009, this increase was only 0.54%. This is a good indicator of the cost-conscious nature of your Board and management.
• MEC too is in a capital intensive construction phase. Though we receive contribution in aid of construction on most of our capital projects, there is still a significant capital requirement that MEC is responsible for- this along with increasing wholesale electricity costs are the main drivers behind MEC having to adjust rates.
As we approach the date of implementation for these rate adjustments, we will be sure to communicate to the membership the details as they impact your particular rate class. Feel free to contact our office should you have any questions or concerns. I ask for your patience throughout this process because, until more details are known, our answers to your questions may seem inadequate.
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