North Western Electric Cooperative (NWEC) would like to address the information published in the July 7, 2021, Bryan Times article titled “Study: Edgerton offers most affordable utilities.”
While we appreciate the time and effort done to research this subject, the rate comparison used between NWEC and neighboring utilities is not a fair apples to apples comparison, as it does not consider the key differences between not-for-profit electric cooperatives and for-profit investor-owned utilities or municipal utilities.
Accounts per mile of line
One key difference is the number of member-owners (called customers in other utilities) that NWEC has per mile of line. As a rural co-op, NWEC serves an average of 5.5 accounts per mile of line (6,010 active accounts on 1,084 miles of line). To put this into perspective, city or urban utilities like Edgerton and Bryan both serve an average of around 44 accounts per mile of line. (Edgerton lists 1,107 active accounts on 25 miles of line, while Bryan’s 2019 annual report lists 6,050 electric meters and 136 miles of line.)
In this case, NWEC has 38.5 fewer accounts per mile of line than its neighboring city utility – which means more costs to cover spread over fewer member-owners. This is one of the main challenges of being a rural electric provider in low-populated areas where the cost to provide power is significantly higher. This is why NWEC’s service charge ($35) is higher than neighboring city utilities.
Power Cost Adjustment & kWh Tax
Many factors go into calculating rates, including service charge (see above) and power cost adjustment – all of which may not have been equally taken into consideration in the study. By removing NWEC’s power cost adjustment, NWEC’s average monthly fee would be $87.08 for 500 kwh, including tax. Not all utility rate calculations appear to include that, so again, it’s not a fair apples to apples comparison.
The kWh tax is also worth mentioning, given that municipals keep most of the revenue from that tax, while the co-op does not.
Perhaps most importantly, as a not-for-profit cooperative business that is owned by the members it serves, NWEC returns capital credits – which represents each member-owner’s equity in the co-op, based on the amount of electricity they use – each year. In other words, any excess margins (this is the co-op word for revenues) not used for capital investments is returned to the co-op’s member-owners.
Last year, NWEC returned $725,000 in capital credits to current and former member-owners. Eligible co-op member-owners received the refund as a credit on their electric bill or as a separate check in December 2020. Last year, a member-owner using 500 kWh per month (the usage listed in the study) would have received $66.31 in capital credit allocations.
Electric co-ops like NWEC are the only utilities who return equity to their member-owners (or consumers). Capital credits were not taken into consideration in the study.
NWEC’s average residential member-owner used 1,259 kWh last year, so the study’s monthly comparison at 500 kWh doesn’t make sense for the co-op. All utilities charge a kWh charge. For example, NWEC’s is 10 cents per kWh, whereas Montpelier’s is 11 cents. This helps even out the electric bills for NWEC members with average usage.
If NWEC had more member-owner accounts closer together, the co-op could have a lower service charge with rates at or below the local utilities mentioned in the study. Also, not including all the charges that give the complete rate picture for each utility is misleading. It’s worth noting the co-op is not-for-profit, returns capital credits annually, and is owned by the members it serves – unlike other utilities.
All of NWEC’s rate information is posted publicly on our website and available at www.nwec.com/rates-charges. Any members with questions about rates or how to read their bill can call the co-op Monday through Friday from 7 am to 4 pm at 800-647-6932.