Pioneer Prepares for Distribution Rate Adjustment Effective January 1
Message from the President, Ron Salyer
As I outlined in the November issue of Ohio Cooperative Living magazine, Pioneer Electric’s distribution rates will increase on January 1, 2024, for the first time since 2016. This adjustment is necessary to offset the escalating costs of materials and other operational expenses, driven by inflation and increasing lead times for purchasing needed equipment. (See page 18 for details.)
For our average residential member, who uses 1,250 kilowatt-hours each month, the increase will equate to about $4.13 per month, or 2.3%. Depending on their billing cycles, members will start to see the rate adjustment beginning on electric bills received between mid-January and early February.
The rate adjustment is reflective of the results of a comprehensive cost-of-service evaluation, which provided detailed information on what it costs the co-op to make service available and helps to ensure that each member is paying his/her fair share.
Pioneer’s rates reflect the cost of providing service in more rural areas, which average six member-consumers per mile of line, compared 34 to 50 customers per mile of line served by investor-owned utilities and municipal electricity providers. Compared to other Ohio cooperatives, Pioneer’s rates are about average.
The increase will be divided between the Availability Charge and the Local Distribution Charge. The Availability Charge, a fixed cost that includes expenses related to the maintenance and upkeep of our electric infrastructure, will increase $2.25 a month, or 7.5 cents a day, to $44.75 per month.
The Local Distribution Charge, which is the component of the billing structure within the control of the member-consumer, will increase less than two-tenths of a cent per kWh from $0.0313 to $0.0328, or 6.25 cents per day for the average member using 1,250 kWh a month.
The distribution rate or charge is the portion of your electric bill that Pioneer can control locally, including purchasing and maintaining equipment, substations, wires, poles, and transformers, as well as labor to complete daily work.
However, transmission and generation costs, or those costs that Pioneer does not control, have increased throughout the past eight years. Those costs are determined by the organizations transmitting and generating the power Pioneer distributes.
Pioneer’s rates are based on actual costs associated with delivering electricity. And, to that end, we return excess margins, called capital credits, to our members on an annual basis. Pioneer has returned more than $61 million in capital credits to its members since 1981.
In 2020, we were able to avoid a previously anticipated rate increase due to purchasing delays caused by supply chain issues, consolidating employee positions upon retirements, and strong financial management. However, due to challenges posed by inflation and equipment lead times, this adjustment is necessary to offset the escalating costs attributed to materials and other operational expenses.
At Pioneer, we approach rate adjustments with our member-consumers at top of mind, recognizing the financial impact these changes have on our members. We are committed to maintaining the affordability of your bills while also ensuring the reliability you have come to depend on.
We’re proud that our service reliability is superior to most, with our members fully powered 99.98% of the time.
Recognizing the challenges that rising energy costs can pose, Pioneer offers various options to assist our members. These include budget billing, home energy audits, and incentives for energy-efficient home improvements. Please do not hesitate to contact us to see whether any of these options could benefit you.
Tools for Cost Savings
- Use SmartHub to monitor electric use.
- Take advantage of rebates and incentives that are available for energy-efficient home improvements, including insulation, water heaters, and upgrading HVAC equipment. Updates coming in 2024.
- Utilize the various tools and programs to help members determine how and how much electricity is being used — including budget billing and home energy audits — offered by the co-op.
Effects of Inflation
Inflation and the residual effects of the pandemic have increased the price of nearly everything. The cost of electrical equipment and supplies necessary for the cooperative’s local operations is no exception.