In today’s modern, connected world, having a reliable source of safe and affordable electricity is crucial. That’s what Cape Hatteras Electric Cooperative strives to deliver to you all day, every day. We’re proud of our efforts to serve your needs with competitively priced electricity, responsive member services, proactive and necessary investments in the electricity grid, all while maintaining the financial ability to retire member capital credits on a regular basis.
With system improvements, increases in the cost of purchased power and installation of transmission cables on the new jug handle bridge in Rodanthe, it has come time to perform a cost of service study. The study provides in-depth analysis of revenues, expenses and future cost projections to determine how much revenue will be needed to meet the financial obligations of the cooperative. The last cost of service study was conducted in 2017.
During a cost of service study, rates are examined and recommendations for changes are made concerning the base charge, rate structures and the cost per kWh. Today’s rising costs of fuel and equipment, coupled with increased energy demand, has many utilities facing similar cost pressures. However, CHEC has some additional financial pressures. Here on Hatteras Island, facilities are subjected to extreme coastal conditions and rapidly deteriorating electric infrastructure requiring increased maintenance and depreciation expense. Our current construction work plan includes several large construction and maintenance projects, including a Hatteras substation transformer upgrade, foundation repairs in the Buxton substation, 115kV line switch replacements and 115kV and 34.5kV line pole replacements. In addition, the cooperative has been working to install transmission cables on the newly opened jug handle bridge in Rodanthe. This project will cost approximately $15 million. Finally, all costs associated with these required capital improvements will not produce any additional revenue to recoup those costs. These are all factors that will be considered in the study.
In every cost of service study difficult decisions must be made to equitably distribute the revenue requirements over the various rates and their components. For example, options such as a change in the per kWh rate or the introduction of new rate structures, including additional time-of-use options, could be used to meet future revenue requirements. Objectivity is the key to producing an accurate cost of service study. For that reason, CHEC has contracted with the National Rural Utilities Cooperative Finance Corporation to take our financial information and cost projections and present the cooperative with recommendations for our future rates. We anticipate the study to be completed in the late fall of this year.
Please remember that CHEC is a not-for-profit utility. It is always our goal to provide the highest quality electric service at the least cost possible. Our rates are designed not to make a profit, but simply to cover the costs of providing that power. We will continue to look for cost saving measures to minimize the impact of rate changes to our members and will continue to offer energy efficiency programs that help our members reduce their monthly electricity bill. As your trusted energy advisor, CHEC will continue to support your energy needs with a variety of solutions and resources, like complimentary home energy audits and guidance on the installation of renewable options like residential solar. For more information these programs and resources, visit chec.coop/energysolutions.