PRESS RELEASE
Southern Maryland Electric Cooperative, Inc. (SMECO) recently had an adjustment to its Distribution Service rate approved by the Maryland Public Service Commission. This is the first change in SMECO’s Distribution Charge since 1994.
Customer bills have two main components, the Distribution Service and the Standard Offer Service (SOS). The costs SMECO incurs for power lines, utility poles, transformers, substations, buildings, vehicles, employees, and the cost of rebuilding after a hurricane or a tornado are covered by the Distribution Service portion of customers’ monthly bills. This rate adjustment will result in a modest increase of about 3.9 percent on a residential customer’s overall bill. A typical customer using 1,300 kilowatt-hours (kWh) per month will have an increase of about $5.75 on average.
SMECO’s residential Distribution Charge was $0.0279 per kWh in the summer and $0.0219 per kWh in the winter. The new rate is $0.0289 (2.89 cents) per kWh year-round. The residential Customer Charge of $8.60 per month is not changing. The Customer Charge and the Distribution Charge under the rate schedules for general service customers, street lights, and security yard lights will also be adjusted. The new rates will be reflected on bills rendered on or after October 1, 2007.
The SOS Energy Charge and Power Cost Adjustment together cover the cost of energy. SMECO makes no profit on Standard Offer Service; the cost of energy is simply a pass-through cost. The wholesale price that SMECO pays for energy is passed on to customers without any mark-up.
As energy costs nationwide have increased over the past couple of years, the SOS portion of the customer bill has changed, but the rates for Distribution Service have not changed in 13 years. During that period, the number of customer-members has grown from 102,600 to 142,000. According to Austin J. Slater, Jr., SMECO President and CEO, “Our construction plans for the next 20 years include substations and transmission lines to meet our customers’ requirements for energy and reliability.” SMECO’s annual construction costs have increased from $22 million in 1994 to $49 million in 2006. Slater added, “Although we have consolidated and streamlined services to maintain cost-effectiveness, the co-op requires this modest rate increase to provide the level of reliability customers expect and to maintain SMECO’s financial integrity.”
SMECO is celebrating its 70 th anniversary this year. The Co-op started with a loan of $165,000 to build 175 miles of line to serve 600 families in Southern Maryland. Slater added, “Since 1937, average electric use has increased by almost 2,000 percent, because customers require energy for things that were unimaginable 70 years ago. Electric co-ops were created solely to serve customer-members: to provide electricity, safely, reliably, and at a reasonable cost. And our goal has not changed.”