Bal­anc­ing the books on our backs

Rappahannock News - - COMMENT - BY SETH HEALD Seth Heald, of Rix­eyville, is a mem­ber/owner of REC. He re­ceived an MS de­gree in en­ergy pol­icy and cli­mate this year from Johns Hop­kins Uni­ver­sity and serves as chair of the Sierra Club Vir­ginia Chap­ter.

Cus­tomers of Rappahannock Elec­tric Co­op­er­a­tive could be in for a shock when they open their bills next year. In a fil­ing with Vir­ginia’s State Cor­po­ra­tion Com­mis­sion, REC seeks to dou­ble its fixed monthly ac­cess charge, which all cus­tomers must pay, re­gard­less of how much or how lit­tle elec­tric­ity they con­sume. REC an­nounced its rate fil­ing in the July is­sue of its magazine Co­op­er­a­tive Liv­ing but failed to men­tion the pro­posal’s key fea­ture — the ac­cess-charge dou­bling. In its Au­gust is­sue REC fi­nally men­tioned the dou­bling, but that is­sue ar­rived too late to al­low cus­tomers to weigh in on the plan by par­tic­i­pat­ing as par­ties in the rate case.

What REC has not told its cus­tomers is that dou­bling their monthly ac­cess charges is a ma­jor re­arrange­ment of how the co-op al­lo­cates its rates among cus­tomers. The changed struc­ture fa­vors cus­tomers who con­sume large amounts of elec­tric­ity over those who use less. Cus­tomers with low monthly us­age will see their bills in­crease by a far higher per­cent­age than their fel­low co-op mem­bers with high con­sump­tion.

Most of REC’s low-con­sump­tion cus­tomers are peo­ple of lim­ited in­come, in­clud­ing many re­tirees. Lim­ited-in­come cus­tomers re­duce elec­tric­ity con­sump­tion to keep their bills af­ford­able. They now find REC, in­ex­pli­ca­bly, work­ing against them. The Amer­i­can As­so­ci­a­tion of Re­tired Per­sons (AARP) has op­posed rate-re­struc­tur­ing ef­forts like REC’s that in­crease fixed monthly charges. Join­ing AARP in fight­ing util­ity fixed-charge in­creases are the NAACP, Con­sumers Union, and the Na­tional Law Cen­ter. All these groups point out that in­creas­ing fixed fees, as REC has pro­posed, makes it harder for cus­tomers to con­trol their monthly bills. State reg­u­la­tors across the coun­try have agreed, of­ten re­ject­ing or scal­ing back util­i­ties’ pro­pos­als to in­crease fixed monthly charges.

But it’s not just low-in­come cus­tomers that REC’s new rate struc­ture treats harshly. All cus­tomers who try to re­duce their elec­tric­ity us­age are pe­nal­ized. This in­cludes cus­tomers who re­duce us­age through more ef­fi­cient lights or ap­pli­ances or in­su­la­tion, as well as cus­tomers who sup­ply part of their own elec­tric­ity with so­lar pan­els. These cus­tomers would be pe­nal­ized even though they help the co-op re­duce fuel costs, pol­lu­tion, and the need for costly gen­er­at­ing ca­pac­ity. Also dis­fa­vored are cus­tomers with low us­age be­cause they heat with non-elec­tric sources such as wood, propane, or oil.

In a Sierra Club fil­ing in REC’s rate case Melissa Whited of Sy­napse En­ergy Eco­nom­ics notes that the co-op could raise needed rev­enues with­out dis­pro­por­tion­ately fa­vor­ing one group of cus­tomers over another. Whited points out that REC’s pro­posal, by fa­vor­ing those who con­sume more over those who con­sume less, gives price sig­nals that pro­mote waste in elec­tric­ity con­sump­tion. This con­flicts with REC’s ef­forts to re­duce the co-op’s costs, in­clud­ing costs of ex­pen­sive en­ergy at times of peak us­age.

Cus­tomers whom REC has tar­geted should feel be­trayed by their co-op’s move to bal­ance its books on their backs. How did this hap­pen? We can’t know what the board con­sid­ered in ap­prov­ing the pro­posed rate re­struc­tur­ing, be­cause it meets be­hind closed doors. That’s con­trary to the prin­ci­ple of open­ness that ought to gov­ern co-ops with a state­sanc­tioned mo­nop­oly. A co-op’s cus­tomers, after all, own the firm. (REC will pro­vide meet­ing min­utes to co-op mem­bers on re­quest, but the meet­ing min­utes don’t pro­vide de­tails of board de­lib­er­a­tions.)

REC’s in­su­lar, se­cre­tive board cul­ture is a ma­jor part of the prob­lem. It shuts out dis­sent­ing views and al­lows man­age­ment to con­trol a pli­able board. Un­like REC, some elec­tric co-ops open their board meet­ings to all co-op mem­bers and pro­vide board mem­bers’ con­tact in­for­ma­tion on their web­sites. REC’s board sets its own (gen­er­ous) pay be­hind closed doors. The board a few years ago even blocked a co-op mem­ber’s ef­fort to re­quire dis­clo­sure of each board mem­ber’s to­tal an­nual pay. With that sort of cav­a­lier at­ti­tude to­ward the co-op mem­bers who pay the board’s com­pen­sa­tion, it’s easy to see how REC’s board could be obliv­i­ous to how its ac­tions harm low­er­in­come cus­tomers.

Vir­ginia At­tor­ney Gen­eral Mark Her­ring, through his Of­fice of Con­sumer Coun­sel, has in­ter­vened in REC’s rate case. REC’s low-con­sump­tion cus­tomers should hope that the Con­sumer Coun­sel will seek to block the co-op from im­ple­ment­ing an ill-ad­vised rate re­struc­tur­ing.

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