Pioneer Electric Board of Trustees Approves Three-Part Rate

Sept. 23, 2022 – The Pioneer Electric Cooperative, Inc. Board of Trustees voted to approve the proposed Three-Part Rate structure on Friday, Sept. 23, 2022. The approved rate redesign will separate charges associated with members’ kW (kilowatt) demand from their energy (kWh) charge. Costs related to members’ kW demand will be listed under a new bill line item titled “Energy Delivery Charge/Demand Charge.” The approved rate restructure will be implemented on Oct. 1 and reflected on bills beginning in Nov. 2022.

“It’s important to understand that the Three-Part Rate is not a residential rate increase,” said Steve Epperson, CEO of Pioneer Electric. “Demand has always been part of members’ bills. A Three-Part Rate breaks the demand out of the Energy Charge and gives members a more accurate picture of the cost to power their homes.”

Epperson stated that the approved Three-Part Rate design is revenue-neutral and modernizes the previous rate structure.

“Pioneer Electric must have a rate structure that can respond to rapidly changing market conditions and member choices regarding alternative technologies like solar or wind,” said Epperson. “Having the appropriate rate design in place that aligns fixed costs with fixed charges will ensure the equitable allocation of costs to all members and thus avoid cost shifts among members. “

The Energy Delivery Charge/Demand Charge will appear on bills beginning in November and calculated from the highest recorded demand during the billing cycle.

“The new Energy Delivery Charge/Demand Charge gives people the power to take control of their energy use,” said Anita Wendt, Vice President of Energy Services. “Demand will vary for each member. Simple things like spreading out your energy-hungry chores, such as running the dishwasher and washing machine when energy use is low, will make a difference for members who want to maintain a lower demand.”

Additional information regarding the Three-Part Rate and its associated charges can be found here. Members with questions regarding the approved Three-Part Rate structure may contact the cooperative’s headquarters by calling 620-356-1211 during regular business hours (Monday-Friday, 8:00 a.m – 5:00 p.m.)

Pioneer Electric Cooperative, Inc. is dedicated to providing members with safe and reliable electric service. Headquartered in Ulysses, Kansas, Pioneer Electric is a distribution cooperative owned and controlled by its members. Pioneer Electric serves approximately 15,900 retail electric meters across ten counties in southwestern Kansas. The system has more than 117 miles of transmission line, 3,600 miles of distribution line, and 21 substations. All of Pioneer Electric’s electricity is procured by Sunflower Electric Power Corporation, which is owned by Pioneer Electric and five other Kansas electric co-ops. Pioneer Electric is a Touchstone Energy Cooperative.

 

What makes up the three-part rate?

Customer Charge: A fixed charge that covers the operating expense incurred by Pioneer Electric for some of the administrative and infrastructure costs needed to provide energy service to members. It has always been listed on members’ bills and will not change.

Energy Delivery Charge/Demand Charge: A charge to appropriately allocate costs to build, maintain or upgrade the infrastructure (power lines, transformers, substation upgrades, etc.) needed to ensure enough energy is delivered to meet members’ needs. The charge is determined by the maximum demand of energy at any point within the billing cycle multiplied by the determined rate for a members’ specific rate class.

Energy (kWh) Charge: The cost for the total amount of energy, measured in kilowatt hour (kWh), used within the billing period. It is calculated by taking the total kWh used by the member and multiplying it by Pioneer Electric’s kWh charge for the member. This charge will decrease with the implementation of the three-part rate structure.

Three-part rate structure and how power is delivered:

Pioneer Electric’s goal is to provide energy service safely and affordably to its members. Pioneer Electric is a distribution cooperative that purchases generated power on behalf of its members and then distributes it to homes, farms, and businesses in its service territory. Pioneer Electric is a not-for-profit cooperative, operating at cost to provide service while working to fairly allocate those costs.
The proposed three-part rate separates the Customer Charge (a set charge for providing service), Energy Delivery Charge/Demand Charge (the rate at which a member uses electricity) and Energy (kWh) Charges (cost per kWh of the total electricity used) assigned to a member’s energy service.
These charges are not new and are a part of Pioneer’s current rate structure. Transitioning to a three-part rate gives Pioneer Electric a more accurate representation of the individual costs of providing its members’ energy service and keeps members with a lower demand from having to help offset the cost of those with higher demand.

What is demand?

Demand is the rate at which a person utilizes electricity. Demand increases when many large or power-hungry appliances operate simultaneously. In these instances, Pioneer Electric must have the infrastructure to ensure enough power is available to the members’ home or business to satisfy their current need for immediate electricity. Pioneer Electric’s system must be built to supply energy at maximum demand for each member. It is important to remember that demand is not the total amount of energy used; it is the rate at which it is being used.

What can members do to manage their demand?

The energy needs of members are not the same. The three-part rate is a transparent look at members’ costs and allows them to see the direct impact of their energy habits. For some, convenience may outweigh the desire to reduce demand. However, those looking to reduce their demand may do so by evaluating their current energy habits. Take time to review if power-hungry tasks can be spread or done throughout the day rather than all at once. The goal is to balance and reduce the rate you are using energy to lower demand. Stagger the use of large appliances (dishwashers, laundry machines, clothes dryers, ranges, ovens, etc.) or use delay start or appliance timers to have them run throughout the day. This may potentially reduce your energy costs.

If you have any questions or would like additional information, please attend the meeting on September 23, 2022 at 9:00 a.m., or contact our office at 620-356-1211 or 1-800-794-9302. You may obtain a complete summary of the proposed rate redesign at Pioneer’s office or by visiting www.pioneerelectric.coop.