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The New Not-So-Normal

  By: Chris Reese, President & CEO

  Email: contacttheceo@sussexrec.com

Think about it, if you want cable TV or streaming services, you pay a fee plus some additional costs for what you use. Cell phone service requires a fee plus additional charges. Some people pay a fee to be a member at a bulk goods store, plus they pay for what they need. Keep this in mind as you read on.

Just as inflation has impacted everything we purchase, from the price of gasoline to the price of eggs, costs for the fuels required to produce electricity have also risen. After the pandemic cleared, we heard the term “the New Normal.” More appropriately, I believe, it should be called “the New Not-So-Normal,” as there is nothing normal about our current times.

Last year Sussex REC had to raise our rates in response to a large spike in our costs of power generation, plus a rise in costs of material, equipment, and fleet expenses. Prices have continued to rise and lead times remain extended.

Some factors SREC can manage, some of them our members can impact, and still other factors are beyond our control.
There are basically two primary parts to your monthly electric bill: a System Connection Fee and a kWh energy usage charge. Like the examples I mentioned above, there is both a base fee and a charge for what you use. To understand your total energy costs and what impacts your bill, let’s unpack one piece at a time.

The System Connection Fee is the fixed monthly charge, which covers the costs associated for your home to be connected to our grid, our “system.” This charge includes the equipment, materials, labor, and operating costs necessary to serve each of SREC’s 12,000 meters in our service territory, regardless of the amount of energy you us.

In order to ensure reliable service, we must maintain the local system, including power lines, substations, tree trimming, and other necessary equipment. As I mentioned earlier, just like many other businesses, we’ve experienced supply chain issues and steep cost increases for some of our basic equipment and materials like transformers, poles, wire, etc. The System Connection Fee is the same for each residential member, allowing the costs to be shared equally across the membership.

The other main component of a monthly residential bill is the kWh charge, which covers how much energy you consume. You’ve likely noticed the amount of energy you use can vary from month to month and is typically impacted by temperature. When temperatures soar or dip, your cooling and heating equipment run longer which increases your home energy use. Regardless, energy consumption is an area that you have some control over and you can lower your monthly bill by actively reducing energy use. There are many ways to reduce energy use and every home is different, but a quick internet search for our site or countless others will produce a plethora of tips and solutions for you and your home.

Despite rising costs and difficult economic conditions, our board of directors and employees have worked meticulously to control spending. The current economic climate presents unique challenges for electric co-ops and their members across America. Driven by inflation, the daily cost of living has increased in nearly all areas just as the cost of fuel needed to produce electricity is rising at precipitous rates. As not-for-profit utilities, co-ops must pass along those rising costs to members at a time when most may be feeling they are being squeezed from all sides. Remember, we set our rates only to collect enough to run the utility effectively and efficiently. Nothing goes to any individuals, or investors, or towards a stock price.

Last year’s rate increase was on both the kWh charge and the System Connection Fee. We cannot provide reliable electricity to our membership without raising our rates again for 2024. Upon review of comments from and discussions with members, we believe a recurring message is the ability to budget. As explained earlier, this is much more difficult with the kWh charge as usage varies for each member. With a System Connection Fee increase that is the same each month, members can better budget for this. We are planning a nominal increase to our System Connection Fee of $5.00 per month. I continue to hope that this “new not-so normal” economic phase will pass and that prices and supply chain issues will stabilize. The fact is, no one truly knows, but until then we will continue to strive to serve the entire membership fairly and effectively.

Our government, however, will need to be a part of that stabilization. Government policy lately appears to be pushing America’s electric cooperatives and other utilities to generate more electricity as America moves to electrify more of its economy. But that’s difficult to do as plants fueled by always-available power (coal, natural gas, and even nuclear) are forced to shut down due to other government policies. Solar, wind, and battery power are an important part of a broader energy portfolio, but they are only available part of the time and are not “one-for-one” replacements of power plants. The National Rural Electric Cooperative Association and our power provider, Allegheny Electric Cooperative, work very hard to help keep grid reliability a top priority as the nation tries to reduce carbon. However, as SREC’s Director of Marketing, Claudia Raffay, explained it to her 16-year-old niece, “they have the cart loaded with all the ideas and plans to reduce carbon, but the horse to pull that cart has not been born yet.”

PREA and Allegheny Electric Cooperative president Steve Brame recently wrote a column that explains the national picture in more detail. I thought it was well done and worth sharing. Please take a moment to read it. At Sussex Rural, I assure you, we will always work to provide the highest quality of service at the lowest possible cost.