New Rate Structure FAQs
Howard Electric Cooperative is implementing a NEW rate structure that gives members more control over their power bill than ever before!
By simply reducing energy use during the highest cost period each day, members can save on power bills.
We are proud of the partnership with our members that goes back over 80 years… and we are even more excited to partner with you towards the future! The energy landscape and technology has been changing rapidly, but one thing will remain the same – our commitment: to provide our members quality electric services at competitive costs.
As a cooperative, our business model is different – we are member-owned. You get a vote in our annual meetings, and as you pay your electric bill over time, you receive funds back in the form of capital credits. Each decision we make is made with our members in mind and how we most equitably go forward into the future together.
A new way of looking towards the future: We are embracing a new rate structure that will allow us to continue to provide you with energy at reasonable costs – no matter its form. After a great deal of study, we have determined that this rate structure will allow us to best serve all members in the fairest way possible both now and in the future.
What are the different parts of the new rate structure?
Availability charge. The cost of making service available to our members. It partially covers the operating costs of the cooperative.
Energy Charge. Energy is the number of kilowatt-hours used by the member over the billing period. Based on your individual meter reading, this is the number of units you are used to seeing each month on your bill. The energy charge is equal to the kilowatt-hours used multiplied by the energy rate.
(kWh) – One kilowatt-hour is defined as the amount of energy consumed by a 1000-Watt appliance running continuously for 1 hour. For more on KW demand charges, see previous manager’s Columns at www.howardelectric.com.
What are the On-Peak hours?
On-peak is defined as the hours during the day when electricity is most used and when power is more expensive.
Morning Peak – (6 a.m. to 8 a.m.) the need or demand for electricity is greatest in the morning hours when we start our day by taking showers, additional use of appliances, and turning up the heat.
Evening Peak – (4 p.m. to 8 p.m.) the need or demand for electricity is greatest during the afternoon hours when a majority of our members arrive home to end the day by cooking dinner, washing and drying clothes and in the summer months turning the thermostat down to cool off.
Any use of electricity that can be avoided or shifted outside of these peak usage hours saves money on HEC’s wholesale power bill and ultimately your bill as well. With the current rate structure that HEC and other utilities have been using for many decades, there has not been an effective way to directly share those savings with members until now. The metering technology we have in place allows us to measure the amount of electricity used during peak usage hours. We have restructured our rates to better reflect the actual cost of operating HEC and now you can make choices in the way you use electricity that will directly affect your bill.
You will now have the opportunity to lower your total power costs by reducing electricity use during these On-Peak hours each day.
How much can be saved by lowering usage during these hours?
This is an introductory peak hour rate. At .75₵ per KW, this is the lowest time of day KW charge in the nation and the purpose is to educate members on their own KW usage. (*Note: The demand charge is now $2.50 effective April 1,2017. Changes reflected below) Initially, there won’t be much savings by shaving peak for most of our members because the KW charge is so low. But over time, the KW charge will go up and the kWh charge will go down until Associated’s peak charge to Howard Electric is recouped through the members‘ KW charge. This should occur over the next 3-5 years. As these adjustments are made in 2017 and beyond, 1/3 of our members will see rate decreases, 1/3 of our members will see no rate differences, and 1/3 of our members will see rate increases. For those who see rate increases, there are simple steps that can be done to turn those increases into decreases. We will have more on that later. Giving you more control over your electric bill is the purpose of this new rate design.
What are the financial costs of the new rate structure?
There are THREE main categories of cost incurred by our system by residential and commercial members:
- Availability Charge – This is the cost to make electric service available to all members.
Residential - $32.00 per month Commercial - $47.00 per month
- Energy Charge – This is the energy portion of the power cost.
All kWh’s at .0926₵
- On-Peak Charge – This is the rate for the highest ONE hour of electric use during the On-Peak time frame of the billing period.
$2.50 per kw (Effective April 1, 2017)
When will this new rate structure take effect?
Bills rendered beginning April 1, 2016 will reflect use during the previous month of March.
Why a new rate structure?
We now have the technology in place that will allow us to charge a more accurate fee for electric use and recover costs from members as they occur in the system. Rates should be cost-based so that members in each rate class pay their fair share of the total costs.