PEC's member-elected Board of Directors and executive staff continuously monitor the financial stability of the organization to determine if a rate change is necessary based on a class cost of service study.

The Board of Directors then decides what the rates will be based on the following rate making principles:

• Rates should generate the revenue required to operate the Cooperative, including appropriate operating margins.
• Operating costs and margin requirements should be spread across all member classes equitably.
• Rates should reflect the cost of serving each member class.

Rate design is a balancing act between meeting revenue needs while minimizing the overall financial impact to members.

As a not-for-profit organization, it is necessary to recover the costs of doing business, as well as maintain enough cash reserves (margins) to reinvest in the system.

Therefore, it is important to 1) evaluate the cost of providing service to members, 2) determine the revenue required to cover the costs, and 3) charge rates that ensure the required revenue is collected.  The process involves completing a cost of service study which is typically done every three to five years.

The study, completed by an independent and experienced firm, evaluates costs and identifies the total revenue requirement for the Cooperative.  The costs are allocated appropriately based on classifications such as residential, commercial, and industrial which are based on the type of service, equipment, infrastructure, and the capacity required to provide service.  The results of the cost of service study are then used as a tool to design rates.

• To identify the cost of providing service based on customer class (residential vs. commercial), type of service provided (single vs. three-phase), and energy load characteristics (the demand and capacity requirements a service puts on the system).
• To provide guidance for distributing and allocating revenue requirements to ensure equity between rate classes.
• To provide guidance when designing individual rate schedules to ensure equity within each rate class and to ensure recovery of adequate revenue to provide service required by members.

• Rates should generate the revenue required to operate the Cooperative, including appropriate operating margins.
• Rates should reflect the cost of serving consumers when the rates are in effect.
• If a consumer causes a cost to be incurred by the utility, the consumer should pay that cost.
• Consumers should pay their "fair" share of the utility's costs and margins.

Typically, members are on a rate for 12 consecutive months before being moved to another rate.  There can be exceptions to this, like when a major load is added to your service, qualify it for a new rate.

To the electric utility, demand represents the amount of electrical power that must be available to consumers at any given time.  

To learn more about demand and how it affects the electrical grid, click below.

Understanding Demand

The charge ensures that member expectations for continuous power and outstanding customer service are met.

It provides the funds required to maintain the quality, reliability, and integrity of services that our members count on and have come to expect.  The expenses include items such as:

• Substations, wire, poles, transformers, and equipment needed to distribute reliable electricity and members' power needs.
• Trucks, equipment, and tools required to build and maintain the electric distribution system.
• Facilities that house trucks, equipment, and supplies, including the technology and office supplies needed to operate.
• Payroll for the wages of the professionals who design, build, maintain, and restore the system, as well as the staff needed to operate the business.
• Vegetation management and system inspections to ensure the safety and reliability of the electrical system.
• Liability insurance, interest on long term debt, and property taxes.
• New technologies to provide increased reliability and operational efficiencies such as the automated metering infrastructure (AMI) system, outage management system, and investments in renewable energy.

Because all cooperative members benefit from having reliable electric service available when they want it, the basic service charge ensures that everyone pays their fair share of the basic costs - fixed costs that exist whether or not a single kWh is used.

All electric utilities are different.  PEC serves rural area, has low consumer density, and few large industrial members to distribute the financial load.

For example: PEC serves an average of just over eight consumers per mile of electric line equaling nearly $19,000 of revenue per mile of line.  RPU's average is 69 consumers per mile of line with average revenue over $207,000 per mile of line.  Regardless of consumer density, PEC is committed to meet each member's needs and expectations for reliable electric service.

Legacy

A service location within PEC service territory that was served by the Cooperative prior to the Alliant acquisition.  Billing statements for these accounts have green colored headings.

SMEC

A service location within PEC service territory that was acquired from Alliant Energy in 2015.  The billing statements for these accounts have blue colored headings.

NOTE:

Dairyland Power Cooperative is the power provider for legacy members and Alliant Energy is the provider for SMEC members.

The Cooperative has several options to help members manage electric costs.  Services include energy management programs to help manage electric usage as well as flexible payment options such as budget billing and a pre-pay option.  The first step is knowing how much energy you are consuming.  This data is available through SmartHub.

Members can find helpful information about conserving energy on the "Energy Saving Resources" page of the website which includes: 

• Energy conservation tips
• Energy Star appliance guide
• Home Energy Guide
• Energy Calculator
• Locations of home energy savings kits that walk members through simple tools to evaluate energy usage

Energy Saving Resources