Cape Hatteras Electric Cooperative recently concluded a cost of service study, which was conducted to ensure that electricity rates are sufficient to recover the cooperative’s power costs and operating expenses for both residential and commercial members.
CHEC’s rate consultant, along with management, reviewed the results of the study and presented the findings to the cooperative Board of Directors in November 2017.
With expected increases in the cost of purchased power and system improvements, including the upcoming replacement of our transmission cable on the new Bonner Bridge, the study revealed that it is necessary to implement an average 13.72% rate increase beginning in May 2018.
Of this amount, 7.2% of the increase is the result of projected wholesale power cost increases. The remaining 6.52% can be attributed to operations and administrative expenses, as well as the increase in depreciation and interest expense associated with nearly $20 million in capital investments over the next three years. CHEC has held rates at their current level since 2009.
In terms of dollar amounts, a residential account that has a monthly bill of $120 will see an increase of $21, bringing the bill to $141. Included is a small increase in the basic monthly service charge, which helps the cooperative cover the cost of building and maintaining the distribution system and delivering power. The residential and commercial monthly service charges will each increase by $5.00 to equal $25.00 and $30.00, respectively.
A full list of the new rate schedule is available at www.chec.coop.
Per a press release from CHEC, the company’s management and staff will continue to work diligently to manage costs and to keep rates stable, for as long as possible. However, CHEC reports that the cost of power continues to rise, as does the cost of equipment necessary to keep electrical system operating safely and reliably. Based on current projections, CHEC anticipates having to implement another rate increase in three to four years.