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What
is the legal and financial relationship between OCEC and OCEI?
Okanogan
County Energy Inc. is a wholly owned subsidiary of Okanogan
County Electric Cooperative and by IRS ruling is completely
separate financially from the Coop.
It is a for-profit private corporation which competes
with major marketers and is totally self-supported by its own
revenue.
When
was the Coop’s last independent audit and what was was the
result?
An
independent Audit is performed each year per RUS and CFC
requirements and the Coop was found to be in conformity with
accounting principles generally accepted in the United States of
America. The
Audit results are presented every year at our annual meeting.
Fiber
Connection
In
2008 the Coop extended a fiber line from Twisp to Winthrop.
It was done to provide the same business opportunities in
Winthrop that are available in Twisp.
OCEC borrowed $98,000 for the fiber extension all of
which is being paid by a local ISP through a contract
arrangement to ensure that our electric members would bear no
cost for the installation. This
information was presented at our 2008 annual meeting.
Can
members have access to the financial records of the Coop?
Our
Balance Sheet and Statement of Operations for OCEC is always
available to any member that requests them.
What
is the cause for the immediate need for the rate change?
There
were actually two major events that combined to create our need
for this rate change. The
first was a major decrease in construction due to the economy.
We have seen about a 61% ($306,000) reduction in revenue
from aid to construction compared to previous years.
The second is a wholesale power increase on two fronts
that struck with little or no advanced notice on the amount of
the increase. In
August we received a 15% retroactive increase for the fiscal
year back to October 1st 2008 and beginning October 1st
2009 we received an increase of 12.5% for the next rate period
which together gave us a projected wholesale power increase of
$261,330 for the year. Both
of which were unbudgeted.
What
is a Cost-of-Service Analysis (COSA)?
It
is an analysis of data that answers questions for cooperative
utilities that relate to ensuring equity between rate classes.
This is accomplished by allocating all of the
Plant-in-Service and Operation & Maintenance expenses (the
cost to borrow money, the cost of poles/lines/transformers,
trucks/fuel, labor, headquarters staff, buildings, insurance,
margins, etc. etc.) to each class of service.
Each
of these costs is ratioed to the customer classes by various
means using Kilowatt hours, demand, number of customers and
other data as the basis for those ratios.
It then compares those ratioed expenses per class to the
revenue generated by each class under the current rate and
suggests a rate structure to bring equity between all classes.
One
the most important results of an unbundled Cost of Service Study
are that it shows how much each class of service is contributing
to the overall financial position of the utility.
The COSA methodology shows that if each class produces
from the rates the revenue needed, then each class is also
contributing an equal percentage to the margins.
Clarification
of our Demand/Capacity charge.
In
our definition of demand it is synonymous with capacity and the
terms are interchangeable. The
demand charge on your bill is directly related to the capacity
that the Coop has built and continues to build into our
distribution system to handle all of the peak loads (demand)
required by each service. This
is a fixed cost that is not related to the demand that
BPA charges the Coop.
Rate
Structure Explanation
The
following refers to the flow charts 1A and 2A (Scroll Down).
Our
Rate Schedule divides our expenses into two major groups:
A.
All fixed expenses
related to delivering or making energy available for your use.
This includes accounting, billing, engineering, operation
& maintenance, interest and principle payments, facilities,
vehicles, taxes and insurance – virtually all expenses not
related to energy (Kwh + Kw).
This is done for both the minimum system (base charge)
and the demand/capacity built into the system to accommodate
peak loads. Our rate
design follows the COSA recommended rate schedule that divides
our fixed expenses into two portions: 58% being allocated to the
base charge and 42% allocated to the demand/capacity charge.
B.
Energy costs are
separated out from our fixed expenses and treated as a pass
through. A forecast
is used to determine the future (next years) wholesale cost and
the price is set accordingly.
This price includes all costs associated with energy from
both transmission and generation with demand and kilowatt
hours included.
Chart 1A
Chart 2A
Has
the Coop made any adjustments or cut in spending?
Over
the course of the year we have made significant reductions in
spending to try and offset some of the effects discussed
earlier. The
reductions have been in many areas from line equipment to health
care benefits totaling about $300,000.
We are continually evaluating where further adjustments
can be made.
Will the
Board evaluate the rate structure at a future date?
The
Board feels the Rate Structure that is now in place helps us to
identify, to the membership, the costs associated with the
delivery and use of energy to each service on our system.
With the completion of the 2010 budget the Board will
evaluate the rate (the numbers within the rate structure) and
will adjust it accordingly.
Rate Increase Downloads
September
2009 Meeting December
2009 Meeting November
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