Electricity Rates Slated for 30% Increase

Rappahannock Electric Cooperative sent a high-powered team of executives to Clarke County on Tuesday to address both its billing rates and electricity reliability. However, REC’s availability to field questions and concerns failed to lure any members of the public to attend the meeting.

Rappahannock Electrical Cooperative president and CEO Kent D. Farmer - Photo courtesy REC

REC president and chief executive officer Kent Farmer in his address to the Clarke County Board of Supervisors used the opportunity to recap of his company’s first year as power-provider at a 1:00 pm public meeting.

“We are back in Clarke County today to see if we are meeting your expectations,” Farmer told the supervisors.

On June 1, 2010, REC took over management of power operations after purchasing the electricity service area formerly administered by Allegheny Power. The service area, which includes most but not all of Clarke County, includes portions of 22 Virginia counties and provides power to 155,000 customers.

Farmer, accompanied by a team of REC executives ready to field questions from Clarke residents and the supervisors, recounted that REC got off to a shaky start in its first few weeks on the job.

REC board member and Clarke County resident, Christopher G. Shipe also attended the meeting.

“We had an immediate problem with equipment last summer,” Farmer said. “Then later we were hit by snowstorms in February. We can’t do much about the snow, but we are continuing work on improving the right of ways for our power lines,” Farmer said.

Farmer said that he believes that it will take three to five years to improve the power line right of ways to the level that REC requires.

In addressing electricity rates and complaints by local residents of unexpectedly high power bills, Farmer said that rates had not changed because REC rates are governed by state regulators.

However, Farmer said that rate increases are just around the corner.

“We have not increased our rates,” Farmer assured the supervisors. “REC is still billing at the same rates as when you were with Allegheny Power. The problem is that when it is a lot hotter or colder consumers use more kilowatt hours of electricity.” Farmer blamed the increased power usage on extreme weather conditions.

(CLICK TO ENLARGE) - REC says electrical rate increases would have been more aggressive under a plan by former electricity provider Allegheny Power - graph courtesy REC

“It was a lot hotter last summer and a lot colder last winter than it has been in the last three to four years,” Farmer said.

Given that extreme temperatures can play an unpredictable role in power bills, a more predictable, if unwelcome factor, is about to be added to the power usage formula. Farmer said that REC’s rates will increase by 7.5% on July 1st for Clarke County residents and other REC members. Farmer added that consumers will see a 30% rate increase over the next four to five years.

At least one county supervisor was alarmed by the projected rate hikes.

“How did you manage to get a 30% raise in your rates in hard times like these?” exclaimed supervisor Pete Dunning (White Post).

“The rate increase is based on what had already been negotiated by Allegheny Power before we purchased the service area,” Farmer replied. “Right now you have a better rate than what you would have had under Allegheny Power’s plan which would have immediately raise rates by 30%.”

Farmer said that REC customers are benefiting from its decision to spread the already-approved 30% rate increase over several years. “Right now you’re paying 30% less than everyone else in the state for your electricity,” Farmer said.

Farmer added that some of the local concern about higher bills may be caused by REC’s accounting process which emphasizes actual monthly meter reports instead of Allegheny Power’s approach which often produced bills based on estimated power meter readings.

“That may be, but a lot of people right now are having a rough time making ends meet,” Dunning replied. “What are the main things that people can do to lower their electricity bills?”

Farmer said that REC customers had several options for decreasing electricity bills including increasing home insulation, installing “smart” switches on water heaters and purchasing energy efficient appliances.

“But whatever you do,” Farmer said to Dunning. “Do not take that old refrigerator that you replace and put it in the garage to keep your beer cold. If you do you’re not going to see your bill go down.”

Farmer told the supervisors that REC will install smart switches on water heaters at no cost to consumers as a painless way of reducing energy bills.

“The hot water switch allows REC to remotely turn of a hot water tank during peak demand periods,” Farmer said. “40% of our peak power demand costs are based on just one hour of each day. Our intention is to manage that peak demand with the help of our members in ways that they never have to see.”

Farmer said that 30,000 REC members are already allowing REC to manage their hot water heaters through remote access using smart switches. Farmer also said that REC members can receive a free energy audit from the utility provider to help pinpoint energy saving opportunities within a home or business.

“One of our people will come to your home and go through it with you to help pinpoint places where you are losing energy,” Farmer offered.

Farmer described other innovative technologies strategies that REC is using to improve its operating efficiency like smart power meters that can be read remotely and that automatically report power outages. Farmer also said that REC’s electricity procurement strategy, which includes an 11% ownership stake in power provider Old Dominion Electrical Cooperative which runs the nuclear North Anna Power Station located in Louisa County in central Virginia, is key to keeping power rates manageable.

“The North Anna plant is producing power at half the price of electricity on the open market,” Farmer said.

But Supervisor David Weiss (Buckmarsh) appeared unconvinced after listening to Farmer’s explanation for service outages and power bill increases.

“The machinery on my farm is handled by a separate meter,” Weiss noted. “The electricity bill for my machinery went up and it had nothing to do with the cold or the heat. Maybe some of it had to do billing estimates but Allegheny Power came out pretty regularly.”

Weiss also pointed out that he rarely lost power under Allegheny Power but power outages are more frequent now that REC has taken over the service area.

(CLICK TO ENLARGE)

“We are trying to invest our money in better equipment and maintaining the right of way,s” Farmer replied. “It’s going to take a while to get the system up to REC’s standards. Our goal is to provide reliable, environmentally friendly power at the lowest possible cost.”

Supervisor Chairman, Michael Hobert (Berryville) asked Farmer whether REC was working on other initiatives that might assist county residents, like broadband access.

Farmer replied that while REC is looking at providing broadband services, its most recent foray into the market had not been very successful.

“REC is an investor in an initiative called Virginia Broadband, but it hasn’t worked very well,” Farmer said. “We are now looking at other alternatives for offering broadband to our members. We haven’t given up yet.”

Hobert also pointed out that REC’s smart meter service, for which members pay $3 per month so that the utility provider is automatically notified of power disruptions, has a benefit to REC as well the consumer.

“I ask that you reconsider the monthly charge for the smart meter service because consumers are already paying REC to provide their power and it’s in your best interest to know as soon as possible when power is out to a customer.”

Farmer agreed with Hobert’s premise and promised that the company would give the request further consideration.

As a member-owned cooperative, REC is managed by directors elected by its customers. According to “Rappahannock Currents,” REC’s newsletter, three positions for board of director will be filled at its annual meeting in August. Completed nomination forms for board of director candidates must be endorsed by at least 25 signatures of other REC members in good standing and be returned to the office of president of REC no later than 5:00pm on May 5, 2011.

Rappahannock Electric Cooperative’s annual meeting will be held on August 13th and is open to all members. Details of the meeting location will be available on the REC website or by calling 800.552.3904.

 

Comments

  1. RasputinSays says:

    So much for electric cars….

  2. My 2 Cents says:

    Pure Lip Service!!!!!!!!!!!!!!!!!!! [redacted]

    • sumrbrez says:

      Lip service? That meeting would not be my definition of lip service. The way I read it, they’re going to do what they’re going to do and to hell with the client base.

  3. 30%! Schweet! Good thing REC doesn’t have a monopoly or anything and I can change my provider to……………oh wait……………………………

  4. sumrbrez says:

    What a load of manure. And all anyone can do is suck it up. I’m sorry, but this is outrageous. They bulldoze their way in and in what SOUNDS like arrogant prosthelitizing advise that rates are going up 30% … they either don’t hear or they don’t care. People have voiced concern over already higher bills and now this? The “right of ways” are all messed up and need to be fixed? Really? ppfffttttttt

    • My 2 Cents says:

      And how convient for them to show up at 1pm to this meeting when they know people are at work. I wonder if they would come back and have another meeting at around 7pm????? My guess is heck no!!!!!!!!!!!!!!! [redacted]

      • The County shouldn’t allow 1:00 pm meetings. Who the [redacted] can be there. They don’t hold planning, or Council meetings in the day for a reason!
        Is the County to friendly with these REC Excecutives?

  5. BlossomButt says:

    Sorry REC, but your answers are strong BULL. I have a GAS waterheater, stove, and heating….but my bill is still the same as my neighbor who is all electric!!!! My bill went up immediately after you took over and has not gone down one time. And how considerate of you to have a meeting to address consumer concerns and answer questions AT A TIME WHEN I AM AT WORK TRYING TO MAKE MONEY TO PAY YOUR INFLATED BILL. What a load of [redacted] and you can say all you want, but it is simple greed, a monopoly plain and simple, and I look forward to next year when I will be moving from this god forsaken state and back to where people actually count.

  6. River Watcher says:

    I posted this before, please read this. It clearly says no rate increase!!!!

    Attorney General Ken Cuccinelli announced Tuesday the approval of the transfer and sale of Allegheny Power’s Virginia service territory to Rappahannock Electric Cooperative and Shenandoah Valley Electric Cooperative, along with an agreement that will protect customers from sharp rate increases.

    The State Corporation Commission approved the transaction and imposed conditions to protect customers that the attorney general’s office and Frederick County negotiated with Allegheny Power and the cooperatives.

    Cuccinelli’s office was concerned that the transaction as originally proposed could result in sharply higher rates for Allegheny’s 102,000 customers and place undue financial burden on the two cooperatives’ 145,000 existing customers. To address these issues, the utilities agreed to the following concessions:

    – Allegheny will contribute $27.5 million to the cooperatives to reduce power supply costs for former Allegheny customers through June 2015.

    – The cooperatives will defer for one year the collection of $5 million in power costs from former Allegheny customers from July 2012 through June 2013.

    – Allegheny will contribute to the cooperatives an additional $35 million to reduce the purchase price of the service territory, which will reduce rates for all customers.

    – The cooperatives agree there will be no base rate increase for former Allegheny customers before July 2014, and distribution rate increases for former Allegheny customers in 2014, 2015, and 2016 are capped at five percent of the total bill.

    – The cooperatives will amend their bylaws to provide representation for the former Allegheny customers on their respective boards of directors.

    The SCC further ordered that the cooperatives not modify base rates before 2020 for either former Allegheny customers or existing cooperative customers without first obtaining commission approval.

    continued..http://www.whsv.com/news/headlines/94275689.html

    • Good find! Looks like it’s time to send this back to the AG with some examples of the price increases the area has suffered

  7. River Watcher says:

    My last posting is very important for every one to read. I don’t believe I’m mistaken with what that says.

    I might be able to understand a gradual increase of 5-10% at a time over a few years. 30% is over the top and is nothing but pure GREED.

    It may help if we all write our Governor or one letter signed by every one. They need to be stopped in their tracks, taking advantage of people during this bad economy is just wrong!.
    I’m wondering if this considered price gauging…

    BTW REC this is not what I would call the future.

  8. Paula Shipman says:

    River Watcher, thank you for posting this important information. I am not convinced that REC is adhering to any of the stipulations listed in the news article that you provided. Furthermore, my dealings with REC have done nothing but increase my frustration at their greed. I see good, hard-working people struggle every day just to keep electric in their homes while REC claims they do nothing but charge for the “electric they use…and everybody uses electric differently. Maybe they are just trying to stay too warm.” No kidding. I had that very conversation with REC this morning.

    Thank you again. Good information. I hope I am not the only reader who will be writing a letter to REC and the Attorney General’s office.

  9. River Watcher says:

    Howdy, Your welcome sarge and Paula its my pleasure to stick to REC.

    I believe their equipment failures such as transformers blowing up and line failures that first month was their own fault, they did it to themselves with power surges. Now they want us to pay for what they caused, I believe its 100% their fault. They took on more than they could handle.
    Its a bit odd we were all fine before they took over.

    One day costumer service told me we were using to much electricity in CC, I busted out laughing.
    Since day one they have been impossible to talk to and full of to many lame excuses. Not once have I, my neighbors or friends been told the same story.
    I’ll be back later to explain the power surge that occured in my home.

    FYI if they increase us by 30% it will effect everything in town, businesses will have to pass along the increase to us!!!!

  10. Jeremy Carter says:

    Wow! What a song and dance.

    First a meeting at 1pm……….excellent choice of time for a meeting. Everyone can be there!! /sarcasm

    I can tell you, from convos I’ve had with Customer Service of REC…..they use the same excuse no matter what time of year it is. The old ‘It’s been hotter and colder than passed years’. Really?? Why is my killowatt usage the same as last year then????? They can NEVER answer well thought out questions.

    It’s always the same pony show with these jokers man. “Everyone uses electricity different” and “It’s been hotter and colder than the past”. Psssh…Get out of here with that mess. Of course, then they try to blame your house for the inconsistencies. C’mon. My house is new(er). My insulation is fine…I have the energy savings bulbs EVERYWHERE…and my appliances are new enough to be meeting energy saving standards. It doesn’t add up….anywhere.

    I’m determined to be a fight in the cause to get something done about REC. I’ve had them for 6 years, and I absolutely hate them. I don’t know what I can actually do, but I’m determined to fight. If a note to whoever will do something, I will write a book!

    I didn’t get a 30% increase in my salary…..hell I don’t get 3%……they shouldn’t either!

  11. Stonebroke says:

    I hope my employer gives me a %75 COLA this year to offset the rise in gas prices and electricity. That might offset it?

  12. River Watcher says:

    I just found out DP is on the mountain here in CC. They just reduced their rates for their customers.

    Every one needs to get involved with this, if someone doesnt know tell them. Stop a friend in the grocery store tell them how you feel about REC.
    I told a room full of people this past weekend about the 30% increase, their mouths hung they had no clue. Then tell them about CDN, which you will be shocked on how many people dont know it exists. Spread the word!
    They need to be stopped before its too late.

  13. Denise Enger says:

    I’m thankful CDN provides such a great forum for folks to “compare notes” on this issue – at least I know I’m not alone in receiving these bills that seem so out of wack! I’m so frustrated with it, it has gotten to the point I DREAD opening each new bill – they have been higher than we have ever seen in the 20+ years we’ve lived here. I am driving my family crazy with my obsessive insistance that every little thing be turned off as much and as long as possible, but it seems to make no difference! I cannot even imagine a 30% increase… 🙁

  14. Woodglen says:

    My electric bill under Allegheny was $93 a month, after REC took over it jumped to $145 a month. Funny I have been in Florida since December 1st (except for two short periods of a week) and the bill has remained the same $145. Note I as still in Florida for this month.