Rate Adjustment FAQ
In March, Sumner-Cowley's Board of Directors approved the new rate restructure proposal which provides your cooperative a 3.6 percent increase in revenue. Beginning in May of 2017, members will see these changes on their statements.
Sumner-Cowley has put together the following FAQ to help members understand the rate adjustment and its various components.
How do Sumner-Cowley’s residential rates compare with other utilities?
Sumner-Cowley’s rates are very competitive with other utilities serving this area. According to the most recent data published by the US Energy Information Administration, Sumner-Cowley’s residential rate is lower than the average residential rate in the state of Kansas.
What is Sumner-Cowley doing to hold down costs?
Sumner-Cowley strives to operate efficiently while sticking to our mission of providing affordable, high-quality and reliable electric services. This means we are always looking for ways to manage costs. Sumner-Cowley hasn’t raised rates since 2004 due in part to these efforts.
Sumner-Cowley has minimized increases by managing costs and implementing a number of cost-saving measures such as:
- Reductions in staffing
- Reductions to the Board of Directors
- Outsourcing the Operations Dept.
- Installing and operating a Peak Shaving Generator which has resulted in savings of $250k in purchased power costs since 2015.
Why is my increase different than the notice amount?
The official notice states that this rate adjustment will result in an overall revenue increase of 3.6% as compared to 2014’s actual revenue. This does not mean your bill will increase by 3.6%. Instead, this number represents the additional revenue needed to cover the costs of running your cooperative.
Who decides when a rate increase is needed?
Sumner-Cowley’s Board of Directors set the cooperative’s electric rates. Directors are Sumner-Cowley members who pay the same rates as you. They are elected by you and other members each year. Directors want to ensure electric rates are adequate to maintain the health of Sumner-Cowley, provide the necessary revenue for delivery of reliable electric service and avoid the subsidization between rate classes. We certainly want to avoid rate increases, but we also need to ensure the long-term financial health of the cooperative.
Who determines the amount of the rate change?
Sumner-Cowley’s member-elected Board of Directors is responsible for ensuring electric rates are adequate to maintain the cooperative’s financial health. In the summer of 2016, Sumner-Cowley’s Board of Directors chose to hire an outside, independent consultant to conduct a Cost of Service Study (COSS). The COSS is an important tool used in setting utility rates. The COSS fairly and equitably breaks down the costs of providing service to each rate class. Each rate class has unique load and service characteristics that impact the costs for that class. The COSS findings offer useful guidelines to assist the board in responsibly allocating costs to each class of members in a way that avoids any class paying more than their fair share.
What is the Facilities Charge?
The Facilities Charge represents the fixed costs incurred by Sumner-Cowley on a monthly basis and is listed as a separate line item on Sumner-Cowley’s billing statements. Some of these fixed costs include the price of connecting to the electrical system, metering, billing, service maintenance, customer service and other costs associated with providing power to the member. These fixed costs remain relatively stable regardless of the amount of kWhs used by the membership. The name, Facility Charge, has nothing to do with the Cooperative’s headquarters or any other facility owned by the Cooperative.
Why did the Facilities Charge increase?
The Facilities Charge increase was necessary for Sumner-Cowley to achieve rate equity among ratepayers. If one member uses only one kilowatt-hour of electricity and another member uses 100 kWh, Sumner-Cowley still incurs the same cost to build the line, maintain the distribution system and deliver electricity to both customers. It takes just as much equipment to deliver one kilowatt-hour as it does 100 kilowatt-hours of energy. An increase in the Facilities Charge was needed to recover a portion of the cost of delivering electricity to all members and help maintain the financial health of your cooperative.
Why is the Facilities Charge different for residential, commercial, and industrial members?
Different kinds of users require different configurations of lines, transformers and substations. Each configuration bears very different costs, which are allocated appropriately to each rate class. That way, no rate class is paying for the needs of another rate class, which is fair and equitable.
When can we expect the next rate increase?
Sumner-Cowley has not implemented a rate increase since 2004. It is very difficult to predict any future rate increase. We promise to do our best to minimize the impacts of these issues by being proactive in our planning, offering education and training on energy efficiency programs and focusing on maintaining the reliability, quality and integrity of our systems.
What are some ways I can manage my bill?
Sumner-Cowley offers a number of options to help you manage your power bill. Some of those services include:
- Budget billing
- The SmartHub app which allows members to monitor and manage their energy use
- A DIY Energy Audit Checklist (available online or at our office)
What did Sumner-Cowley do to inform members about the increase?
Sumner-Cowley strives to give member-consumers as much notice as possible through a variety of methods. This may include newsletter articles, bill stuffers, news releases, etc. Sumner-Cowley started informing members about the need for a rate adjustment in August 2016. Since then, each issue of Kansas Country Living has provided members with information related to the rate adjustment.