Time-of-Use Rates in the Future
I’d like to take you behind the scenes of how we set our electric rates. It may not be as thrilling as a blockbuster movie, but I assure you it’s an interesting process.
In the not-for-profit electric cooperative world, setting rates is a delicate balance between generating enough revenue to maintain and operate a safe and reliable system, and ensuring fairness in everyone’s electric bill. To achieve this, we partnered with an independent consulting firm that specializes in engineering and ratemaking, to help us update our rate structure.
Together, we used a combination of math, economics, and a bit of intuition to create a rate structure that covers our costs and promotes energy efficiency. We refine the rates, making sure each component, such as energy consumption and demand charges, plays its part in a well-balanced rate formula.
A key aspect of our rate-setting process is the assigning of costs. We have members who use electricity for heating air, hot water, washing laundry and dishes, and exterior illumination, but also for electric vehicles, and high-energy commercial equipment. Each customer adds their own costs to the mix based on how and when they use energy. Our goal is to ensure that everyone contributes revenue which offsets the costs the cooperative incurs to serve them.
Based on this rate-setting process, management has made rate adjustment proposals to the URE Board of Trustees for approval at their next meeting. Approved rate adjustments will be communicated in the July and August editions of Cooperative Living magazine and will be effective with your August bill.
Looking ahead to next year, we’re finalizing plans to introduce a time-of-use rate structure for our members, which will allow you to take control of what you are billed and save money by simply shifting heavy electric usage to off-peak hours. As the electric landscape evolves with the increasing popularity of high usage equipment like electric vehicles and even distributed generation like solar panels, we need a rate system that adapts to these changes.
Moving to time-of-use rates will better align how we bill our members with how Buckeye Power, our generation and transmission provider, bills the cooperative. Historically, we have billed our members for how much electricity they used. Time-of-use rates allow us to bill our members based on the amount of electricity they used and when they used it.
By implementing time-of-use rates, we hope to encourage members to use electricity during off-peak hours, when it’s more affordable and less taxing on our grid. This approach helps us support the electrification of our economy, accommodate distributed generation, and stay ahead of the curve as new technologies emerge. It also means that using large amounts of energy during peak hours will cost more and will shift some additional costs to those members who are raising costs to the cooperative.
By periodically reviewing our rates in detail and making the necessary adjustments. URE remains committed to providing you with the safe, reliable, and affordable energy you depend on. As always, we remain dedicated to serving our members and ensuring the best possible experience from your electric cooperative.