Starting April 1, 2007 , Oconto Electric members will experience a rate increase of approximately 5.5%.

There are several reasons for this increase and I would like to take this opportunity to explain them. Before I do that, I would like to extend my sincere appreciation to each of you who are part of Oconto Electric’s load management program. Whether it is the water heating, air conditioning or electric heat portion of the program, they all had an effect on this increase – making it less than it would have been without them. The load management programs can reduce OEC expenses by as much as $500,000 annually. That is $500,000 we do not have to collect through electric bills.

The chart below shows the old rates and the new rates. The change in the price per kilowatt-hour comes mostly from the increase in the cost of wholesale power. The reason for the increase in the facility charge is due to two things primarily: larger facilities needed to serve increasing loads and increases in the cost of materials.

First, let me explain what I mean by larger facilities needed to serve increasing loads. Compare the items that use electricity in an average home thirty years ago to today’s home. Thirty years ago, most homes had one or two TVs, a stereo and maybe a VCR. Today there are TV’s in many rooms, DVD players for each TV, a surround sound system, maybe an Xbox and several computers. We also own a lot of equipment that needs to be recharged like ipods, cell phones and digital cameras. More homes have central air conditioners, air filtration systems and water conditioners than ever before; and how many of us actually have to get out of the vehicle to open the garage door? Looking at each item individually, it isn’t a lot of electricity but start adding everything up and it’s huge. For the last thirty years, the size of a transformer that OEC would install to serve the average home was a 10 kva. Now the average size is a 15 kva transformer which, of course, costs more.

The carrying capacity of the wires you see along a road has increased. This means the wires are heavier than before causing all other facilities to be larger and heavier right down to the size of the pole.

The other increase I mentioned was the increase in materials. Take a look at the table above. It shows some of the increases OEC has experienced in the past few years when purchasing major items used to build lines. Increases range from 37-134%.

Rate increases are part of the world we live in. Since 2001, Wisconsin Public Service (WPS) customers have faced several increases which have amounted to over 67%. Oconto Electric Cooperative electric rates are currently very competitive with WPS’s rural electric rates. That is partly because of our member’s participation in load management programs, partly because of margins from our retail locations (RadioShack and OECellular) and partly because of the co-op’s commitment to keep expenses as low as possible.

Byron C. Nolde
CEO