VEC 2025 Rate Request

What rate is being requested for 2025?

On November 15, 2024, VEC filed with the Public Utility Commission (PUC) a request for a 4.84 percent rate increase effective Jan. 1, 2025. 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.

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 2025 rate increase request include:

• Transmission Costs. We are part of a regional system of transmission that delivers power from generators to consumer distribution systems, and ensures an adequate power supply and balanced flow of electrons in our system every minute of every day. As part of this system, VEC shares in the regional cost of these services. This year New England growth in transmission construction has resulted in increased costs – which is a trend we expect to continue in the coming years. These costs represent one-quarter of the cost increases driving our current rate request.
• Property Taxes. VEC owns over 2,400 miles of line and 37 substations in 75 Vermont communities. As a not-for-profit, we do not pay income taxes but we do pay local property taxes. Like many of you, we are experiencing significant increases – in our case a 28 percent increase in 2024. Property tax increases alone are second behind transmission in total cost increase impact.
• Inflationary costs of wages, benefits and interest rates. We are still experiencing the result of years of high inflation. From a 17 percent increase in health insurance to ongoing high interest rates – these cost increases show up in our day-to-day business as our local workforce delivers core energy services to our members.
• Storm Recovery. As a VEC member, you are surely aware of the recent weather that has wreaked more frequent havoc on our system. We now spend more time and dollars on storm restoration than in past years. While we are deeply grateful for Federal Emergency Management Agency (FEMA) reimbursements for some portion of our costs from these events, our average annual costs continue to increase significantly.

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, an 8.19 percent rate increase in 2023, and an 8.33 percent increase in 2024. If a 4.84 rate increase is approved for 2025, the ten-year average rate increase will be 2.66%, 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.

What is VEC doing to reduce costs?

On the positive side, after several years of dramatic increases in the cost of purchasing power to provide our members, we are seeing those costs decrease. Most of our power is procured through contracts. Some of these contracts are fixed price, but others have adjustments that reflect the market. During the last few years, these contracts have been impacted by the rising regional power market. However, in 2025, the contract price is falling due to a lower power market. Because of that, our costs to purchase power will be slightly less in 2025 than we experienced in 2024.

Also, over the last several years, have been adding more infrastructure to our system. At the same time, we’re now seeing the increased total system power usage from the addition of new members, as well as growing electrification of existing members through heat pump and electric vehicle adoption. The result is that we are sharing the costs of our operations and infrastructure with a larger pool of members and more sales revenue, and that’s a net benefit for us all.

Before asking for a rate increase, the VEC team tightened our belts and scrubbed the 2025 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 29, 2024, the VEC Finance Committee and the full VEC Board of Directors reviewed VEC’s financial position and approved the November 15, 2024 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 2025, 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 other communications. We encourage members to contact the VEC office with any questions. 800-832-2667 or [email protected].