As you recall in the September issue of the WREN statewide magazine an article was written about a Cost of Service study that was performed by a rate consultant this Fall. High Plains Power has not done a complete cost of service study for about 10 years. A lot of changes have occurred the last 10 years.
A cost of service study analyzes the cost to provide electric service to each rate class. There are 5 rate classes which are classified as residential, seasonal, irrigation, commercial and industrial. All the costs are unbundled for each rate class to make sure that each class is paying the appropriate amount to cover the costs to serve them.
This study is a valuable tool which helps High Plains Power in making decisions to meet financial goals and objectives. As with any successful business, you must charge the appropriate rate to cover your costs. As a not-for-profit cooperative, we don’t raise rates to generate profits - we raise rates to cover the cost of doing business and meet regulatory requirements. The price we pay for wholesale energy from Tri-State Generation and Transmission has increased by 4.23% for 2017. Wholesale power costs make up 81% of High Plains Power’s expenses. That means 81 cents of every dollar collected goes to Tri-State and only 19 cents is the amount we use to operate our whole system.
The rate increase impacts the five rate classes differently because as stated above, each rate class was separated to see what it costs to serve that class.
The High Plains Power board of directors has approved a rate increase effective January 1, 2017 as follows:
While no one likes to see a rate increase, your board of directors does not take this responsibility lightly and has a fiduciary responsibility to keep your cooperative financially stable. You can be assured that as not-for-profit cooperative; your board of directors only raises rates when it is absolutely necessary.
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