New Residential Rate

Cobb EMC Establishes New Residential Rate

Cobb EMC has created a new residential rate effective for all new Members signing up for service in 2016. The new rate dubbed “Smart Choice” will be available for all other Members by June 1, 2016. The official designation of the “Smart Choice” rate is Residential Service Schedule R-14 and is currently scheduled to become mandatory for all residential customers by January 1, 2019. The new rate is not intended to be a rate increase but is intended to leave total revenues the same as in the old Standard Rate. However, the new rate is intended to better reflect how each consumer imposes costs on Cobb EMC and therefore can raise costs for some Members while lowering costs for others.

Click here to downloaExcel_Icond Cobb EMC Forum’s Excel based Rate Comparison Calculator that will allow you to compare how the new rate affects you based on your own usage patterns. You can enter various usage levels and see how the current rate compares to the new R-14 rate.

 

Existing Standard Rate versus New Demand Rate

Most residential Members are currently on the Standard Rate (officially designated as Residential Service Schedule R-12 Rate 10). The Standard Rate includes a $22/month service charge plus a charge for each kilowatt hour used during the billing period. The cents/kilowatt hour charge varies  depending on how many kilowatt hours are used during the month. Kilowatt hour charges are higher in the summer, when Cobb EMC experiences its peak demand and has to pay more for its power supply. Click here for Cobb EMC’s official rate schedule for the Standard Rate.

The new Smart Choice rate is what is known as a “Demand Rate“. The primary difference in a Demand Rate is that it includes a fixed monthly charge based on your highest usage hour of the year (also know as your Peak Demand). This is most likely one of the hottest hours of the summer when your air conditioner is running full blast, your electric clothes dryer is running, your kids have the refrigerator door hanging open to grab a cold drink, and you are cooking dinner on your electric range (your visiting brother-in-law is also grabbing a slow shower after the frisbee tournament and your electric water heater is running full blast). A Demand Rate charges you a fixed charge every month for your usage during this worst hour of the year. Click here for Cobb EMC’s detailed rate schedule for the “Smart Choice” Demand Rate.

The good news is there is a tradeoff for paying a fixed charge every month for your worst hour of the year. In a Demand Rate, the cost for each kilowatt hour of usage during the rest of the year is much lower than the Standard Rate. In the case of Cobb EMC’s new Demand Rate, the cents/kilowatt hour can be close to half of what it would be for your high usage during the summer.

The new Demand Rate will separate the charges on the bill into a $28/month customer charge, an energy charge of $0.06657/kWh, and a monthly peak demand charge of $5.55/kw/month for each kilowatt of maximum hourly demand beyond 3 kilowatts. A Member’s maximum demand hour will be chosen from a series of “Peak Notification Hours” that will be noticed from 2 until 7 pm from June through September and will remain in effect for the following 12 months.

The “Smart Choice” rate is intended to be revenue neutral for those who make no effort to affect their peak demand, but could save significant money for those who actively conserve during the Peak Notification Hours. A 3 kilowatt reduction in peak demand would reduce a Member’s total bill by about $200/year.

Impact on Renewable Energy, Efficiency Improvements

While the Smart Choice Demand Rate does a better job of reflecting how costs are actually imposed on the EMC, it has the effect of making the economics of rooftop solar, small wind generators or other energy efficiency improvements less compelling unless they serve to reduce peak demand during the Peak Notification Hours. This is due to the fact that the $/kilowatt hour energy charge is dramatically less in the new rate because much of the cost is collected in the demand charge. So any energy savings from renewable or energy efficiency options does not reduce the Member’s bill as much as it would under the old rate. Unless the renewable option or efficiency improvement significantly knock down the demand during the Peak Notification Hours, it may not save enough to pay for the rooftop solar, wind or energy efficiency improvement. As such,the new rate is partly an attempt by Cobb EMC to prevent its rate structure from cross subsidizing solar and other renewable or energy efficiency improvements by those Members that do not avail themselves of such options.

The Bottom Line

Ultimately, the newExcel_Icon Demand Rate has a different impact on different Members with different usage patterns. As stated above, click here to download Cobb EMC Forum’s Excel based Rate Comparison Calculator that will allow you to compare how the new rate affects you based on your own usage patterns. You can also click here for Cobb EMC’s web page that discusses the new “Smart Choice” Demand Rate.

The Demand Rate will tend to make your bill more level throughout the year, higher in the low usage winter months and lower in the high usage summer months. If you use a lot of electric space heaters during the winter, your pattern might be different. The Demand Rate also does a better job of reflecting how costs are really incurred by Cobb EMC. Cobb EMC has to pay fixed costs throughout the year to finance and maintain facilities that really only come into play during the highest usage hours in the summer. The Demand Rate does a better job of charging customers in a way that reflects how they impose costs on the EMC. Finally, the new Demand Rate will make the economics of rooftop solar, small wind generators or other energy efficiency improvements less compelling unless they serve to reduce peak demand during the Peak Notification Hours.