Rates and Tariffs

On November 15, 2022 VEC filed with the Public Utility Commission (PUC) an 8.19 percent rate increase to be effective on Jan. 1, 2023. We appreciate that this is not welcome news and that it is a challenging time for many members. VEC has done our best to keep the rate request as low as possible in a time of severe costs pressures on all of us.

The worldwide shortage of natural gas, which is outside of the direct control of electric distribution utilities, is putting considerable upward cost pressure on the wholesale power market. 60% of VEC’s operating budget is spent on power supply and the transmission system to deliver it. When these costs go up, it is very challenging to mitigate. VEC’s 2023 power supply cost is projected to increase $4.8 million over 2022.

VEC members experienced a 1.96% rate increase in 2022. In 2020, we had a 3.29% increase and prior to that there had not been a rate increase for six years. If the 2023 8.19 percent rate increase is approved, the ten-year average rate increase will be 1.64%, which continues to be well below the 10-year breakeven inflation rate of 2.52%. 

Before asking for a rate increase, VEC thoroughly explored possible cost savings options that would not compromise our core mission of ensuring reliable service. VEC’s finance and power supply team analyzed all power supply options and secured additional regional wind resources that helped to bring the rate increase down to just over 8 percent after higher initial projections. VEC’s long term power contracts have helped us avoid even more volatility. VEC also analyzed all aspects of the VEC operating budget and did our best to keep costs down despite the inflationary pressures all businesses are experiencing including rising interest rates, fuel costs, health care costs, and supply chain pressures. VEC obtained $2.6 million in PPP loan forgiveness which continues to provide ongoing value to 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.

On October 25, 2022, 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 Public Utility Commission (PUC).  The case number is 22-4868-TF. 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. The case can be viewed here. 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 at 800-832-2667, support@vermontelectric.coop.