As regulators, the LCEC trustees set the price of electricity to be charged to the members — including themselves — based on the costs of providing local, safe, reliable, and affordable electricity, and committed, member-focused service. The trustees work to ensure rates are equitable to all members, whether the service is residential, farm, or factory.
Generation and transmission (G&T): These charges represent the costs associated with producing electricity and moving it across transmission lines to the LCEC substations. The G&T charges are billed to LCEC by Buckeye Power, our generation cooperative that provides wholesale power to Ohio’s electric cooperatives. These costs are passed on to our members without being marked up.
As advocates, the LCEC trustees listen to the concerns and needs of the members and bring those concerns and needs to the board meetings for discussion.
The generation and transmission rate is $.07565 per kilowatt-hour (kWh) of electricity. However, this rate is variable, due to the fluctuating cost of fuel used in generating electricity and will be adjusted up or down each month so our members only pay the actual cost of the wholesale power.
As LCEC trustees work for the good of the membership to ensure the long-term financial health of the cooperative, they keep in mind that LCEC belongs to the members it serves. There are no outside investors or stockholders that the board answers to. The only investors are the active members of the co-op. Because LCEC is a not-for-profit utility and the members are the investors, any excess revenue (what for-profit companies call profit) is invested in capital improvements and given back to the members over time. This is why most years, LCEC members receive a capital credits check. As you can see, the LCEC trustees play a vital role in maintaining the long-term health of the cooperative. One of the more critical and difficult aspects of that role is that of setting rates. To set electric rates, the board must balance lender financial requirements, paying long-term debt, returning capital credits to members, total margins and equity, depreciation and amortization expenses, operating margins, total assets, and more. This difficult task is one of the reasons why the LCEC trustees attend cooperative director courses. They want to ensure they are setting the best rates for LCEC members — rates that are as low as reasonably practical, yet ensure the long-term health of the cooperative.
Detail of rates for residential and farm single-phase service Each month, residential members receive an electric bill from LCEC that shows the total amount due and a breakdown of charges that make up the total due. These charges are generation and transmission, distribution, and basic service charge.
Basic service and distribution: This charge includes the costs incurred by LCEC to deliver reliable electricity to our members’ homes and farms — the costs to build, operate, and maintain LCEC’s electrical system and the costs associated with billing, member service, administration, and general expenses. It’s everything it takes for LCEC to bring electricity from our substations to our members. The basic service charge is a flat monthly fee of $37, and the distribution charge is $.03903 per kWh plus state taxes. These charges ensure that member expectations for reliable power and outstanding member service are met. Further, they provide the funds that are invested in the electric system to maintain the quality, reliability, and integrity of service that our members deserve. Because all LCEC members benefit from having reliable electric service available when they need it, the flat monthly fee ensures that each member pays a fair share of our basic costs — costs that exist whether or not a single kWh of electricity is consumed. Setting rates is an important responsibility of the board of trustees and entails a balancing act between meeting our revenue needs while keeping the rates competitive and affordable for the members. It is comforting to know that your local electric co-op is led by trustees who are members like you and are committed to ensuring their board responsibilities are met. Your co-op was created by the communities we serve with the purpose of serving the members, not making profit for outside investors. JULY 2019 • OHIO COOPERATIVE LIVING 20C