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Sawnee EMC: "Retail Rate Change
Notice" Sawnee EMC: “Retail Rate Changes Are On The Horizon” The staff of Sawnee Electric Membership Corporation announced today that a proposal is underway to review and, where needed, revise many of the Corporation’s retail rates used to bill Sawnee members. “We have not experienced a major retail rate change in most of our retail rates since 1989 and many things have changed in the electric industry in the last twenty (20) years”, states Blake House, Vice President of Member Services for Sawnee EMC. Many factors that are a part of the various retail rates, such as the cost of energy and the cost to provide service to members’ accounts, have changed drastically since the last major retail rate change deployed by Sawnee EMC almost 2 decades ago. One of the main focus areas of this review relates to a billing factor known as the “WPCA”. “The staff has been receiving comments and suggestions from its membership indicating they would like to see a change as it relates to the level of the Wholesale Power Cost Adjustment or WPCA; and in order to do this, rates must be revised” House comments. “We are often asked why this wholesale purchased power cost adjustment is in place and why it has increased; it is because we have passed on the various cost increases seen by the Corporation over the past 20 years to our members through this mechanism instead of changing the rates”, House continues. As an electric cooperative, Sawnee has no other source of revenue to operate the Corporation except the revenue derived from the electric rates it charges the members. Increasing costs in the area of purchasing power, operational costs, as well as other costs such as environmental compliance are all causing the prices or rates Sawnee charges its members to go up. “We are seeing tremendous pressure, from a cost standpoint, in the area of environmental compliance as well as other key business areas”, states Michael A. Goodroe, President and CEO. “Existing federal requirements, such as those found in the Energy Independence and Security Act of 2007, as well as several proposals that are working their way through the U.S. Congress relating to climate change and mandates to purchase renewable energy, are suggesting that “how” we collect revenue from our members must change”, he added. “Green energy or dealing with climate change is not cheap and all of the proposals in Congress, if they become law, will require that our retail rates go up to meet these mandates”, he added. In the last 18 months, Sawnee EMC’s staff held three (3) separate hearings and has been required to develop federally mandated reviews to consider how its rates and practices could be modified to address changes in laws relating to energy resources, energy efficiency and other energy related topics. “The regulatory landscape is changing and we are seeing many new challenges to the structure and cost that are within our retail rates”, House adds. The staff of Sawnee is developing detailed cost allocation models based on a “Cost of Service” study to measure and understand how these costs relate to the revenue collected, by rate class, and to see where changes are advisable or potentially required. “For example, we are being asked to consider “unlinking” our retail rates so that members pay the full cost of service in their base charge and pay no part of this cost in the actual energy rates”, House adds. “We are also being asked to eliminate certain rate design features, such as the “declining energy blocks” or the approach where a user of electric energy pays less per unit as they purchase more energy which traditionally existed in some retail electric rates”. Additionally, the staff of Sawnee is tracking key legislation currently making its way through the U.S. Congress such as HR 2454 or the American Clean Energy and Security Act, that will, if approved and signed into law, affect Sawnee as early as five (5) years from now (e.g. 2014). Among other things, this proposed legislation will require the purchase of an ever-increasing amount of renewable energy or pay a financial penalty. This legislation would also require Sawnee to pay fees to offset the cost of constraining carbon in the environment. Both of these measures are being studied in greater detail by the staff of Sawnee to ensure that we fully understand the potential cost implications to us and our members. We know from our preliminary review that these actions are going to be costly to meet and will require increasing retail electric rates further than previously planned. Changes in the Sawnee EMC retail electric rates are on our horizon. We know that nobody likes to get what is perceived as bad news; however, changes related to the cost of service that Sawnee EMC delivers to its members are occurring and have the potential to increase. These changes will relate to existing cost issues, regulatory review issues, as well as potentially national energy legislation. The Board of Directors of Sawnee EMC and the almost 300 dedicated members of our staff are committed to keeping the members fully informed of these issues facing the Corporation and above all, controlling the cost you pay in rates. We are seeking suggestions and ideas from our members and ask that they contact us at marketing@sawnee.com or call us at (770) 887-2363 to offer their comments. About Sawnee EMC: Sawnee Electric Membership Corporation is a distribution electric cooperative headquartered in Cumming, Georgia. Sawnee serves electricity to over 148,000 accounts in seven (7) counties of greater north Georgia. Sawnee’s assets exceed $368 million with annual energy sales of 2.23 billion and revenue of $201 million. With over 300 dedicated employees, Sawnee’s team of professionals meets the needs of its member-owners through its complex network of over 9,420 miles of distribution facilities. Georgia’s 42 electric cooperatives now serve more customers than any other state network of EMCs in the nation.
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