Marks eighth year with no distribution increase!
Every spring, our generation provider, Buckeye Power, reviews its generation revenue requirements and adjusts the wholesale rates that it charges distribution cooperatives like URE. We review the new rates and determine if adjustments are needed to the retail rates charged to our members. Our goal is to always pass through incurred costs for energy to our members carefully and fairly.
There are 4 elements to Buckeye’s wholesale rates: fuel, PJM demand, Buckeye demand, and energy. The most significant of these is the fuel charge, which is based on the cost of coal, natural gas, and other resources needed to turn the turbines to generate electricity. This is a variable rate charged by kilowatt-hour usage and changes every month. It is also a variable rate on the URE bill to our members.
The other 3 elements are reviewed and adjusted once a year. Buckeye Power is a member of the Pennsylvania, Jersey, Maryland (PJM) regional transmission organization (RTO) that interconnects the power grid over a large portion of the eastern United States. The demand rate associated with PJM is not changing. The Buckeye demand charge covers fixed costs such as depreciation and property taxes on the generation plants and is decreasing July 1 by 15.2%. Finally, the energy charge is based on kilowatt-hour usage and covers Buckeye’s variable costs, such as maintenance on the generation plants and administration. The energy rate per kilowatt-hour is increasing just slightly by 0.35%.
While the fuel cost portion of the bill you receive every month will continue to vary based on Buckeye’s costs for coal and natural gas, the generation rate on your residential bills will actually decrease from $0.0387 per kilowatt-hour to $0.0363, or 6.2%, and the demand (kW) portion of three-phase commercial bills will decrease from $6.12 per kilowatt to $5.45, or 10.9%. Not accounting for changes to the variable fuel and transmission portion of invoices, the average residential and commercial bill will decrease by 1.6%.
It is likely that you’ve heard generation rates are increasing in the region. It is true that many investor-owned utilities who participate in market purchases for their electricity are seeing huge increases. Because Buckeye owns and operates their own generation stations, they have been better able to control costs rather than purchasing energy at auction for the going rate.
There will be no change in URE’s approach to billing transmission and distribution services. The investor-owned utilities we rely on for transmission continue to increase rates as they add capacity. The transmission rates we charge our members are designed to collect the wholesale transmission costs without markup. And, for the eighth consecutive year, there will be no increase to retail distribution rates. The distribution charge on your bill funds the operations of URE, your local electricity provider.
URE’s natural gas rates will also remain unchanged. Gas commodity rates (the cost of gas and the transmission capacity we must purchase to deliver to our members) will continue to be passed through to all members based on actual cost, and there are no changes to the distribution or service charges.
As a not-for-profit cooperative, our goal is to bill our membership only for what we are billed for electric and natural gas costs plus the cost of operating the distribution systems along with reasonable margins. Eventually, these margins are returned to our members in the form of billing credits.