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Tuesday, March 24, 2015

Rates and Rewards



Over the past couple of years, you have likely heard Glasgow EPB issue requests to curtail when we predict peak electric usage. Many of our customers have responded and helped us  reduce community usage, but there is a constant question of “Why should I make the effort?”  Hopefully this blog post will shed some light on that subject, and let you know how reducing peak energy usage will  finally begin to deliver rewards.

Glasgow EPB generates no electricity. All of Glasgow’s power is purchased from TVA, and TVA also sets our wholesale rates.  The rate we pay fluctuates  each month due to varying factors relative to TVA’s cost for production of electricity. For 2014, those rates averaged around 7 cents per kWh. That is true but for the one hour each month when Glasgow’s electric power demand peaks.  During that one hour, TVA charges Glasgow EPB nearly $10.00 per kWh!  However, Glasgow EPB charges our customers about 10 cents per kWh, and that rate presently does not vary. This follows the general pattern used by all electric utilities before more capable metering became available. As you can see, 3 cents is the average retail markup during the majority of the month, however on the heaviest usage hour the Glasgow EPB loses $9.90 per kWh sold. We doubt any business person would agree that this is a viable business model.

TVA has now approved an innovative new rate for Glasgow, and for those who are listening to our requests and predictions, you will finally be rewarded for your assistance.  Later this year, when we actually implement the new rate, the energy rate will become nearly identical to the rate  TVA charges the EPB, without the 3 cent markup.  All EPB electric customers therefore will see a large reduction in the kWh rate portion  of their bill.  However, for that one hour per month, you will see an increase to the roughly $10.00 per kWh (depending on the TVA rate for the month). In order to replace the revenue we will lose due to no longer appreciably marking up kWh, a separate charge will be assessed for the cost of maintaining each customer’s connection to Glasgow’s electric grid. This charge will provide the revenue necessary  to pay for the poles, lines, transformers, etc., necessary to provide service to each residence and business – no matter how much energy a customer may use.

Over the last few years, our intense research revealed that our existing rates resulted in many customers using energy, and paying costs, that simply did not cover the costs associated with serving them.  Imagine pulling into the service station behind a massive RV whose owner decided to fill it completely full while gas was at the rate of $5.00 per gallon, then pulling off and informing the attendant that you, in your economically efficient car, would be paying his bill also. That is exactly what has happened during the entire past history of electric usage across this country. We don’t believe it is fair, TVA agreed, and we believe our customers will also resoundingly agree.

This rate will not take effect until in the fall to winter time frame of 2015, however we wanted to start the discussion, and education, relative to this new rate as soon as possible so everyone would be well informed when the time came.  We will talk to you more here, on our FB page (glasgowepb) and in numerous other ways, about this large change in the way we do our business, over the coming months.  In the meantime, if you haven’t already, why not sign up for your individualized EPB portal that will provide you with real time usage data about your service, and in the near future will show you what your bill would be under both the current rate and the coming new rate.  Just grab your EPB account number and go to http://portal.glasgow-ky.com/ to register today.    
  

5 comments:

Chris said...

Will the new separate charge be in addition to the "customer charge" that is already on our bills for electricity use? I assumed the customer charge was being used for maintenance of the poles and equipment related to getting us service.

Also, when I try to register for an account on the electricity portal it tells me my account number doesn't match, how can I get that cleared up? Thanks!

Billy Ray said...

The fixed customer charge will remain and it will increase. The new delivery charge will be based upon the amount of energy used, so it will be variable. You honed right in on the issue that we fought very hard to get approved by TVA. We wanted to discontinue the fixed customer charge and establish a new method of properly billing everyone for their impact on the total grid costs. This turned out to be too innovative for TVA to approve initially, so we are going to be stuck with this old/new system of collecting the required revenue to pay for the construction and maintenance of the grid. Hopefully, after we show TVA that our community is learning to work with this innovative new rate design, we can correct that problem in a year or two. Thanks for your excellent question!

WildBill said...

Chris:
Thanks for your interest in these exciting changes coming for our customers and the EPB. I don't have any other contact information for you, so just give me a call at (270) 659-3509 at your convenience and I'll help you get your WebPortal account set up. Thanks!

Bill Anderson
Glasgow EPB

jwhite60690 said...

just out of curiousity, have you kept up with the mess paducah power system is currently in? I think their rate is currently like 15 cents per kwh

Billy Ray said...

Yes, we are aware of the Paducah and Princeton situation. All we can say is that we are very thankful that we stayed with TVA and that we now enjoy the benefit of purchasing power from a very diversified portfolio of generation assets.

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