In response to continued inflationary pressures on material and labor and slow local growth, A&N Electric Cooperative filed a general rate case with the Virginia State Corporation Commission in January.
The commission permitted the cooperative to implement its proposed rates, charges, and terms and conditions on an interim basis subject to refund with interest, for bills rendered on and after April 1. Since the onset of Covid, rising costs in fuel, materials, labor and grid modernization have placed significant financial strain on utilities. Supply chain disruptions, inflation and the increasing demand for electricity further compound these challenges. To maintain a resilient and efficient electric distribution system, A&N’s proposed rate adjustment is necessary.
Since 2018 the cost of utility poles has increased by about 25%, the cost of transformers, has increased by 55% to as much as 200% depending on the type and size of the transformer and the cost of wire has increased by 45% to as much as 127% depending on the type and size of the wire.
A&N will transition from recovering demand-related costs through the kilowatt-hour (kWh) charge to a model that recovers demand in a separate demand charge, which will create a more equitable and sustainable system. Recovering demand-related costs through the kWh charge does not account for the strain placed on the grid during peak use times. Implementing a demand charge — where members pay based on their highest level of energy usage — encourages efficiency and reduces overall system stress. This pricing model benefits both utilities and consumers by lowering peak demand, reducing the need for expensive infrastructure upgrades and ultimately stabilizing costs over time.
The cooperative formerly recovered demand-related costs solely through the volumetric energy charge, but recovering such costs through a separate demand charge will allow the cooperative to more appropriately recover the costs of serving each individual member. Demand will be measured during a single billing cycle and will reset for the next cycle. Since demand is the measure of how much total electricity is being used at a given point in time, members will pay more, or less, in demand charges based on their maximum demand for electricity. Ensuring large appliances aren’t operating at the same time is one of the most effective ways to control demand.
The impact of the rate increase on individual member bills will vary based on the rate schedule under which an individual member takes service, and the amount of electricity used.
The general rate case also amended the cooperative’s Terms and Conditions of Providing Electric Service.
For more information, or to view the new rates please visit anec.com or contact one of our member services representatives at 757-787-9750, option 3.