SMECO Cuts Home Electricity Costs 12 Percent
A better than 12 percent reduction for all Southern Maryland Electric Cooperative residential customers takes effect this month, with the May 2015 bills.
SMECO filed an application in February to reduce its energy charges for residential customers and the application was approved by the Maryland Public Service Commission April 29, 2015. The result: lower electricity costs.
“Our energy rates for May will be the lowest they have been in almost 10 years,” said Austin J. Slater, Jr., SMECO president and CEO. “This decrease in energy rates will deliver substantial savings to customer-members, and not only for residential customers, but for commercial accounts, schools, government buildings, and even sports facilities. The average residential customer with monthly usage of 1,300 kilowatt-hours (kWh) will receive a May bill that is $25 less than the April bill.”
SMECO’s residential electricity costs for summer will decrease by 12.5 percent, from 8.61 cents per kWh to 7.53 cents per kWh. Summer energy charges appear on bills rendered May through September. Residential winter energy charges will be reduced from 9.25 cents per kWh to 8.13 cents per kWh.
Mr. Slater called the “rate reduction … significant. We are glad to reduce energy rates when our wholesale energy costs are reduced. Because SMECO is a cooperative, we do not mark up energy costs to earn net margins. When we pass savings on to customers, we demonstrate the value of the cooperative business model which differentiates us from other energy companies.”
SMECO’s Standard Offer Service (SOS) rate is made up of the energy charge and the Power Cost Adjustment (PCA). On SMECO’s monthly electric bills, lower power supply costs have been reflected in the PCA, which has been a credit every month since September 2014. Pending PSC approval, the PCA for May will be a credit of 0.3405 cents per kWh, which will, in effect, reduce the SOS rate from 7.53 cents per kWh to 7.19 cents per kWh, which is the combination of the new reduced energy charge and the PCA, which changes monthly.
SMECO is a customer-owned electric cooperative providing electricity to more than 160,000 services in southern Prince George’s County, and in Charles County, St. Mary’s County, and all but the northeast portion of Calvert County. Co-ops are distinctly different from investor-owned utilities because co-ops are owned by their customers, and these members elect the men and women who serve on the Board of Directors.
Co-ops also issue capital credits to their members. What are capital credits? They are the member’s share of the co-op’s margins, based on how much electricity the member purchased and the rate at which the account was billed. SMECO’s margins—revenue less expenses—are used as working capital for new construction and system improvements. When SMECO’s Board of Directors determines that a percentage of the capital credits can be distributed to members through a general refund, capital credits will be issued by check or credited to members’ electric bills.
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