Changes to OEC Electric Bills

There has been a lot of information in the news lately about electric rates increasing over the next several years.  There are many factors contributing to these increases but for the purpose of this article let’s just say that by far most factors affecting rates come from an increase in the cost of generating power.

As the cost of generation increases, electric bills will increase. Oconto Electric is going to change the format of our electric bills to show our members exactly where the increase is coming from.  At this time we are only going to change the residential power bills.  Changes to time-of-use, seasonal, commercial and large power bills may come at a later time. 

Understanding the Wholesale Power Cost Adjustment

Before explaining the changes to the electric bill, the one item that MUST be understood is the Wholesale Power Cost Adjustment. 

Wholesale power is electricity that OEC purchases from Wisconsin Public Service (WPS), at a wholesale rate, and sells to our members.  Through our contract with WPS, OEC has agreed to pay a base rate plus all additional costs to generate the electricity and get it to the supply point.  Cost Adjustment – means this is the additional cost that OEC is charged from WPS in addition to the base rate.  There are many factors that affect the Wholesale Power Cost Adjustment and it is different each month. There are times it has been as much as 2¢ per kilowatt hour.

The Way It Is Now

A residential bill as it is today shows the Energy Charge at a rate of 10.31¢ multiplied by the number of kilowatt hours purchased in the month, a facility charge of $19.95, the Public Benefits Fee which is $1.33, and possibly other charges such as a security light fee, Community “Change” donation and sales tax but everyone has a Wholesale Power Cost Adjustment.

Changing the Way Bills Look

The bill shown below is an example of how OEC is going to change the bills so members have a better understanding of the cost of power.

On the first line of the bill will be the Wholesale Power Cost.  The rate for the Wholesale Power Cost will fluctuate each month.  It is the base rate paid to WPS and the Wholesale Power Cost Adjustment rolled into one amount and it will reflect what OEC is paying for electricity each month.  The next amount is the public benefits fee which is still $1.33. These first two charges represent the uncontrollable expenses for Oconto Electric.

Next there is OEC’s Operating Costs at 3.4¢ per kilowatt hour. This money is used to run the business.  It includes payroll, transportation, interest, taxes and so on…all expenses OEC has to operate.  Then there is the facility charge.  These two charges– the operating costs and the facility charge - are expenses that OEC does have control over by being efficient and conservative. These expenses overall have not increased for the last several years. 

Since the Wholesale Power Cost will reflect what the co-op is billed each month it will be constantly changing.  If OEC was going to have a rate increase, it would be in the Operating Costs and/or the facility charge.

Then there may be other charges like security light fees, Community “Change” donations and sales tax.

How the Change Affects OEC Members

The co-op wants it’s members to understand, this is not a rate increase. Even though there are more rates, added together these rates will still be the same as the residential rate of 10.31¢ per kilowatt hour plus whatever the Wholesale Power Cost Adjustment would be.  So instead of adding the adjustment, we are just going to show the cost of power on the first line called Wholesale Power Cost.  Co-op staff along with the rest of the utility industry believes the cost of power is going to increase dramatically over the next few years. The change to the electric bills will begin with in June 2009.