The cost of electricity will go up marginally for some members, according to a new rate plan proposed by Pedernales Electric Cooperative, which is moving to consolidate a number of service classifications.
PEC released its 2021 rate plan, including its cost of service study, and rate plan recommendations for 2021 at its regular board of directors meeting Nov. 20 in Johnson City. The plan also involves rate changes in the base power and transmission cost of service.
In consolidating classifications, PEC Vice President of Markets David Thompson said small power service residential classifications would be rolled into a proposed general service classification. The trend in the energy industry 10-15 years ago was to have rates based on the end-use of that power. That way of classifying rates is outdated, Thompson explained.
“We’re moving away in the industry from that to being kind of indifferent with what you want to do with the product that we sell,” he continued.
The water well rate was already absorbed into the residential rate class in November as part of the 2020 rate plan. The impact to members is at most $3 but can be reduced to as low as 50 cents with some billing options. This change affected about a half-percent of all PEC members.
The class consolidation will likely occur in 2022. The general service classification will not be proposed to the board until the 2022 rate plan is presented in the fourth quarter of 2021.
“It’s a difference of approximately four or five dollars a month,” Thompson said. “We’ve been under-collecting from those folks, so we’re just getting them up to the level that we need so there’s no cross-subsidies going on. We gave them notice more than six months ago, so we’ve provided a long runway to make sure the impact is not too bad on anybody.”
All of PEC’s rates are aligned with costs to serve, so if the costs are not aligned appropriately, that causes some members to subsidize others.
As for the base power and transmission cost of service (TCOS) rate change, the base power rate decreased by $0.001/kilowatt-hour and the TCOS rate increased by $0.001/kilowatt-hour. The impact from this change on non-time-of-use (TOU) members is neutral, whereas the impact on TOU members depends on their usage patterns.
“The only difference is the TOU,” Thompson said. “Our members could see an increase, they could see a decrease, it could be neutral.”
TOU members represent less than 0.3 percent of all members.
All PEC members will receive at least a 30-day advance notice of any change in their bills.
Final approval for the change goes before the board at a meeting Dec. 18. If approved, the rate change would go into effect March 1, 2021.
The rate changes for time-of-use vary by season and time of day. The most dramatic increase occurs during the summer superpeak hours (2:01 p.m. to 6 p.m.), rising from the current $0.077141 to $0.088620. Meanwhile, summer normal hours (7:01 a.m. to noon, 8:01 p.m. to 11 p.m.) will dip from the current rate of $0.040297 to $0.035883.
All members that will see in an increase — if any — is less than 0.8 percent.
“This might be a bit of a larger change year over year than we would like, but it’s the first year of getting in the habit of changing it every year to align with our cost,” Thompson said.
CORRECTION: A previous version of this story stated that water well rates were to be absorbed into residential rates. That had already happened in 2020. The story also stated that general service classification could be implemented in 2021, when in reality it could be approved for 2022. Clarifications were also made regarding how many members could be impacted.