Vermont’s two rural electric cooperatives are seeking rate increases for next year, citing rising power supply costs, among other factors.
On Friday, Vermont Electric Co-op filed for a 3.29% rate increase — its first in six years — while Washington Electric Co-op filed for a 5.95% increase.
The largest cost pressures facing VEC, which has 32,000 members across the northernmost band of the state, are regional energy charges.
Electrical utilities have to pay capacity charges to ensure adequate generation is available for peak demand. VEC attributes higher capacity charges to changing trends in electricity use, such as solar pushing the peak use time later in the day. Meanwhile, money VEC receives from selling peak demand capacity associated with Kingdom Wind and other in-state generation has been going down.
In recent years, VEC has been working to offset costs by using a large-scale battery in Hinesburg to draw on stored energy during peak demand. Craig Kieny, director of power planning for VEC, estimates the battery will reduce capacity costs by over $54,000 and transmission costs by $88,000 next year.
Increased grid maintenance costs, including tree trimming, and rising employee health care costs are also contributing to the rate increase, according to a statement from the utility. And net metering is putting upward pressure on VEC’s rates by reducing the amount of electricity the utility sells to net metered customers and because the utility has to pay higher rates for excess electricity that they generate.
“We are proud of the work we have done to keep rates stable in recent years, and in a perfect world, of course, we would prefer not to have to ask for a rate increase,” said Rebecca Towne, VEC’s chief executive officer, in a prepared statement. “However, this is a necessary step to ensure we make essential and cost effective investments in an increasingly complex electrical infrastructure system.”
Washington Electric Co-op members have seen rates go up between 3% and 6% for each of the past three years. Patty Richards, general manager of the 11,460 member co-op in rural north-central Vermont, said that the main cost drivers in recent years have been steady increases in regional energy market costs. Last year, WEC received significantly less money than in previous years from its sale of renewable energy credits associated with the Coventry landfill and other in-state generation facilities.
WEC, too, has been facing cost pressures from net metering, which it estimated cost non-participating customers close to $800,000 this year. And the utility needs more revenue next year to meet lender requirements.
WEC is also seeking, in a separate PUC proceeding, to restructure how it charges customers. Right now, the utility has a $14 customer charge and two tiered energy cost, with customers paying 11 cents per kilowatt hour for the first 200 kWh and 25 cents after that. WEC would like to raise its customer cost to $25, while lowering the per kWh charges.
Richards said the change was largely motivated by the state’s renewable energy standard, which requires utilities to reduce customer fossil fuel use.
“Instead of heating your house with oil or propane, instead of driving a gas powered car, we want people to go and electrify,” she said, noting that WEC is 100% renewably powered.
The change also should provide the utility with more financial predictability, as all customers — regardless of how much electricity they use or whether they have net metering — have to pay the flat fee.
