VEC 2024 Rate Request
What rate is being requested for 2024?
On November 14, 2023, VEC filed with the Public Utility Commission (PUC) a request for an 8.76 percent rate increase effective Jan. 1, 2024. We appreciate that this is not welcome news at a challenging time for many members. VEC has done our best to keep the rate request as low as possible while continuing to ensure we accomplish our core job of providing safe, reliable, and clean electricity to our communities.
How can I comment on this filing?
Any interested person may examine the rate increase filing via ePUC at: https://epuc.vermont.gov. The Case No. is 23-3943-TF. The filing is also available at the Vermont Electric Cooperative office during normal business hours. Comments regarding the rate filing may be submitted to the Public Utility Commission by via mail at 112 State Street, Montpelier, VT 05620-2701, via email at [email protected], or via ePUC at https://epuc.vermont.gov filed into Case No. 23-3943-TF. In addition, the PUC held a public hearing on Tuesday, February 13, 2024.
Why is a rate increase needed?
VEC is experiencing numerous cost pressures, most that are outside of our direct control. The main cost drivers for the 2024 rate increase request include:
• General Running of the Cooperative. Inflation has put upward pressure on some core business costs such as interest expenses, labor costs, property taxes, even the cost of mailing. These factors account for over $2 million in additional costs for foundational business operations.
• Purchasing and Distributing Electricity. Power supply and transmission increases for 2024 are expected to be more than $2.5 million higher than 2023. This is an increase of 4.58 percent over the 2023 budget of $54,870,601. Power supply costs continue to rise as a result of more expensive market rates and contract escalations. Transmission costs are driven by necessary infrastructure investments.
• Maintaining and Operating the Grid, Safely & Securely. To maintain the electrical system, we also rely on contract help and equipment purchases that have also had cost increases from supply chain and inflation. Core functions like vegetation management, security of the grid, and reliable communications systems are more expensive than last year to maintain.
• Decline in Revenues. On top of these cost drivers, VEC is also experiencing reduced revenues due to lower energy demand. We have seen decreased electric usage due to a cooler summer (less use of air conditioners) and a warmer winter (less use of electric heaters). The increase in home-based renewable energy generation (net-metering) also means the co-op sells less electricity. Additionally, the cost we are required to pay for net-metered energy is higher than what we could otherwise buy renewable energy for in the marketplace. We estimate the annual above market costs paid by VEC for net metering excess generation to be over $1.7 million dollars.
How will this rate compare to current and past rates?
In 2020, VEC members had a 3.29 percent increase after not having a rate increase for the prior six years. VEC members experienced a 1.96 percent rate increase in 2022 and an 8.19 percent rate increase in 2023. If 8.76 percent is approved for 2024, the ten-year average rate increase will be 2.22 percent, which continues to be below the 10-year average rate of inflation. Facing the same headwinds as VEC, the last two years have seen substantial rate increases across utilities in Vermont and beyond.
Link here for a comparison of the proposed rates to current rates.
What is VEC doing to cut costs?
Before asking for a rate increase, the VEC team tightened our belts and scrubbed the 2024 budget to find all prudent savings. We expect some increases in revenue due to dividends from VEC investments in VT Transco stock, part of the value of the Vermont model where the distribution utilities own the statewide transmission utility. We also found some cost savings from some program implementation changes – always looking for efficiencies in how we serve you and do our work. We know affordability is important to our members – and it’s important to us too. We also know our members depend on electricity and the reliability of the grid more than ever. Every day our team at VEC works to balance the need to keep rates as low as possible while ensuring we keep our employees and members safe, meet all regulatory requirements, and provide excellent electric service to our members.
What assistance is available to help VEC members?
We highly recommend that VEC members learn about their electricity use and explore efficiency opportunities. A good first step is to sign up for the SmartHub tool which can help show how much electricity is used and when it is used (in one-hour intervals).
SmartHub can help members see how current usage compares to past usage and allows users to set up usage alerts amongst other things. Another helpful step is to explore efficiency opportunities available through Efficiency Vermont such as weatherization incentives, smart thermostats or more efficient appliances.
What is the rate approval process and how can VEC members' comment?
On October 31, 2023, the VEC Finance Committee and the full VEC Board of Directors reviewed VEC’s financial position and approved the filing of the rate increase request with the PUC. The next step in the process is for the PUC to set a review schedule which includes the review by the Vermont Department of Public Service (DPS). As part of that schedule, the PUC will likely set a date for a public hearing and a process for participation. This process could take more than six months. While the requested increase will take effect in January, if the final rate ends up being different than the request, member bills will be adjusted at the end of the process.
VEC will keep members informed through the Co-op Life newsletter, VEC’s website, and e-mail communications. We encourage members to contact the VEC office with any questions. 800-832-2667. The PUC case # is 23-3943-TF