Frequently Asked Questions About Paulding Putnam Electric’s Slight Rate Increase in 2018:
Our customer satisfaction scores rank us among the top performers in the nation. Our commitment to our members is superior reliability at competitive prices and quality customer service, now and in the future. This high level of service requires a fair and equitable investment from each PPEC member. Therefore, PPEC evaluates their rates through a cost of service study periodically to ensure this.
Rate design is a balancing act between meeting our revenue needs while minimizing the overall financial impact to our members. As a not-for-profit organization, we must recover our costs of doing business, as well as maintain sufficient margins to reinvest in our electric distribution system. The cost of service study identifies the total revenue requirements for the cooperative. Through the cost of service study, costs are allocated appropriately to each customer classification based on the service, equipment and infrastructure that is required to serve them. Once completed, rate structures are designed to meet the needs of each classification.
The most recent cost of service study resulted in new rate schedules being developed that will go into effect March 2018. Based on customer classification and consumption, the overall impact to the member may vary with some customers paying more and some paying less. Below are questions and answers that may aid you in understand this rate adjustment.
How much will my bill increase?
PPEC hasn’t had a rate increase in over 4 years. However, in March 2018, residents will see a slight increase of around $3 per month for every residential member.
How will my bill increase?
The monthly service charge will increase from $29.50 to $32.95; however, this will be offset by a reduction in the energy charges. Overall, including a general revenue increase, residential members will see an increase of about $3 per month. Below is a sample residential bill:
I compared last month’s bill to this month’s. Why is it more than 2.75% and/or $3?
Energy costs are the total of distribution, generation, and transmission and Wholesale Power Cost Adjustment (WPCA). Distribution and G & T hold steady, however, the Whole Power Cost Adjustment is volatile and can change each month. During 2017 the WPCA averaged $.0059 and this average WPCA was rolled into the new rates.
What is the Monthly Service Charge for?
The Monthly Service Charge ensures that your expectations for continuous power and outstanding customer service are met. It gives each member a fair and equal share of the cooperative’s operation. It provides funds that must be invested now to maintain the quality, reliability and integrity of services that our members have traditionally counted on and come to expect.
Among the expense items covered by the facility charge are:
- Trucks, wire, transformers, power poles and labor needed to build and maintain the electric distribution system
- Keeping pace with increased system investments to improve both capacity and reliability
- Implementing new technologies to provide increased reliability and operational efficiencies such as the outage management system and advanced metering
- Liability insurance, interest, taxes, and emergency storm restoration
Because all cooperative members benefit from having reliable electric service available when they want it, the monthly service charge ensures that everyone pays their fair share of the basic costs – costs that exist whether or not a single kWh is used.
How will the rate revision affect members who put renewable systems on their homes?
Members on residential net billing will see a monthly service charge increase from $46.50 to $52.95. The energy charge per kWh will increase from $.078010 to $.081252. So, if you have the average monthly use of 1115 kWh per month, you will see an increase of around $3, which is just under a 2 % increase. Our main objective is that all members pay their fair share for the benefits of being connected to the PPEC system regardless of their individual energy choices.
Why is PPEC’s monthly service charge higher than AEP’s?
Paulding Putnam Electric serves on average 8 members per mile of line, whereas municipal utilities and investor owned utilities serve on average 30+ members per mile. Additionally, Paulding Putnam Electric’s sales are 60 percent residential, whereas the other utilities receive a much higher portion of their sales from commercial and industrial customers. All of this means that the other utilities receive 5 to 10 times more revenue per mile of line than we do, and therefore they are much better positioned to spread their fixed costs. It costs over $30,000 to build one mile of single-phase line (or to re-build 1 mile of old line), and $50,000 for one mile of three-phase line. It costs about $1.2 million to build a new substation. These costs simply cannot be recovered only through the kWh energy charge, but must also come from a monthly flat service charge.
When was the last rate increases?
The last cost of service study was performed in 2014, which resulted in an overall 3% increase. PPEC works diligently to control costs thus keeping our rates stable. However, the 2017 cost of service study resulted in the need to update our rate structures to ensure that each member pays their fair share.
Who determines when a rate increase is necessary and the cost increase?
PPEC’s Board of Trustees and Executive Staff continuously monitor the financial stability of the organization to determine if or when a rate increase is necessary. To establish the new rate structure, an independent, experienced firm is hired to review and recommend changes to our rates.
What is the effective date of the new rates and when will I see this reflected on my bill?
The new rates will be effective March 2018.
How does PPEC rates compare with AEP, and other cooperatives in this area?
Currently, PPEC has the lowest cooperative rates in the region and we want our members to understand, when it comes to cost, every decision we make is with the members’ wallet in mind.
According to the 2014 Annual Statistical Report conducted by Ohio Rural Cooperatives, Paulding Putnam Electric:
-PPEC has the lowest rates in Northwest Ohio
-PPEC has the second lowest rates among Ohio Cooperatives
-PPEC has the third lowest compared to all other utilities in the state of Ohio.
– Our rates are also comparable and competitive with Indiana Michigan Power.
Will commercial/industrial rates increase or is this applicable only to residential rates?
Yes, the cost of service study is a comprehensive review of all rates to ensure that each member regardless of their rate classification pays their fair share. Each customer class should pay its fair share of costs without having one customer class subsidizing the other. Commercial and residential accounts monthly bill will vary depending on usage, demand, and power factor.
Are copies of the rate schedule available?
Yes, members may obtain a copy of the new rate schedule by visiting our website www.PPEC.coop
I understand that PPEC has a program to help those in need in the community; are my rates being increased to support this program?
The Operation Round Up program has helped those in need throughout our service territory. The funds to support this program are not included in the overall electric rates. In fact, this program is funded by the generosity of our members who contribute to operation round-up by allowing their electric bill to be rounded to the next whole dollar each month.
Each year capital credits are returned to the members; can PPEC keep those monies instead of increasing rates?
PPEC is a not-for-profit electric cooperative. As such, the not-for-profit nature of the cooperative states that any net profits made by the cooperative must be distributed to the membership in the form of capital credit refunds.
I understand that rates have not increased since 2014, can we expect the same time period with the new rates? Or is another rate increase anticipated and when?
There are several factors that can come into play that can and will affect rates. Many of these are unplanned and can be tied to rising costs for coal, natural gas, storm restoration efforts, legislation requirements, etc. We are committed to doing our best to minimize the impacts to our members by being proactive in our power supply and operational planning and offering tips on saving energy and rebate programs. We are committed to maintaining the reliability, quality and integrity of our electric system.
What is PPEC doing to keep costs down?
PPEC has not increased our rates since 2014. PPEC strives to operate efficiently while adhering to our commitment of providing affordable, high quality and reliable electric service. We continuously evaluate our operations in an effort to keep your rates as low as possible by:
- Implementing beneficial technology to help control costs, provide operational efficiencies and increase reliability such as the outage management system or advanced metering
- Competitively bid all contracts to ensure quality service at the best possible price
- On-going evaluation of our day-to-day operations for opportunities to improve and gain efficiencies
What can I do to reduce my electric costs and can PPEC provide any assistance in this area?
PPEC offers a number of options to help members manage their electric costs. These services include managing electric usage as well as flexible payment options such as budget billing. We also offer a new rate called Time of Day, where you can you can receive a lower rate when using energy during off peak times.
Members may find helpful information about conserving energy on the PPEC website which includes:
- The energy conservation tips that may be found under the Save Energy Menu Tab
- Various energy calculators which you will find on our homepage.
- Links to the Touchstone Energy, which can also be found under the Save Energy Menu Tab
- PPEC also offers home energy audits. The cost is $100.00. If changes are made based on the report, The Cooperative will reimburse the member $100.00 (account credit) the cost of the Energy Audit.
Why didn’t you seek member input first?
Why wasn’t the membership involved in revising the new rates? We did…The Paulding Putnam Electric board of trustees is comprised of members and the board was very involved in all of our rate discussions and studies. So the members of Paulding Putnam Electric had input into this rate decision, through the board of trustees. Also, we have been very open throughout this process, with information regularly being shared in the “Ohio Cooperative Living” and “Electric Consumer” Magazines.