SMECO Files to Reduce Customer Rates

Pax III

Southern Maryland Electric Cooperative (SMECO) has filed an application with the Maryland Public Service Commission (PSC) to reduce its residential Standard Offer Service (SOS) energy charges. In addition, SMECO has proposed a change as to how May and October are designated as summer rate and winter rate months.

SMECO is filing to reduce the residential SOS energy charge for summer from 8.83 cents per kilowatt-hour (kWh) to 8.61 cents per kWh, a reduction of 2.5 percent. Residential energy charges for winter will decrease from 9.62 cents per kWh to 9.25 cents per kWh, a reduction of 3.9 percent. The filing was submitted May 30, and, if approved by the PSC, the reduced charge will appear on customer-members’ August 2014 bills.

The total SOS rate in August will be the combination of the new reduced energy charge and the PCA, which changes monthly. For a residential bill of 1,300 kWh, the average monthly base SOS rate will be $4.00 less. SMECO’s SOS rate covers the cost of electric supply only. Costs incurred for maintaining the electric system are covered by distribution service charges and do not affect the SOS rate.

For its summer and winter rates, SMECO has traditionally classified June through October as summer months and November through May as winter months. Because of shifts in customer energy use patterns, SMECO is proposing to change the summer rate months to May through September and winter rate months to October through April.

SMECO’s rate adjustment is the result of decreased capacity costs. All utilities and energy suppliers in the mid-Atlantic area are required to pay capacity costs; these costs fund existing generating plants, as well as the expansion of plants and transmission facilities, that are needed to meet customers’ demand for electricity. Capacity costs will decrease by more than $13 million over the 12-month period that begins in August.

“We are pleased to pass along savings of nearly $50 a year to our customer-members,” said Austin J. Slater, Jr., SMECO president and CEO. He added, “The co-op does not make a profit on energy charges. We work to keep our rates as low as possible by using a portfolio approach to purchasing power, with contracts for base load and peak load and long-term and short-term contracts. This method of purchasing power produces stable energy rates and helps save money for customer-members overall.”

SMECO is a customer-owned electric cooperative, and we are proud to be a J.D. Power 2014 Customer Champion. We are one of an elite group of 50 U.S. companies to be named to this list.

SMECO provides electricity to more than 156,000 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.