Your Manager's Comments

by Larry J. Umberger

August 2010
Manager's Comments

      In our last newsletter, I spoke of changes to our climate and the way we conduct business here at Midwest.   The new business change referred to “invoice billing” and the opportunity to save money in both postage and the time it takes to enter the data associated with customers that have multiple meters.   Very few phone calls were received from customers on the invoice billing during that first month.   However, I made another change the following month on all of the bills by putting a customer charge line on the bill.   We received a tremendous amount of phone calls wondering why we started charging a $16 customer charge.   You have been paying this $16 each month since we reviewed our rates in 2007.   The new rate was designed to collect part of the actual cost to provide electric service to the customer.   This customer charge is the cost to run Midwest.  These items includes maintenance of lines, substations and buildings, capital improvements, debt service, salaries, retirement of capital credits, meters and all of our trucks and equipment.   This customer charge has always been a part of the rate structure here at Midwest.   At one time, the “minimum” charge of $11 went towards the first block of electricity. That first block of electricity was normally about twice the price per kilowatt-hour as the next block of electricity.   In the past, that rate worked, as most of our members had one home and most used the minimum amount of electricity to pay for that customer charge to facilitate the maintenance and overhead.  Today many members have a second home and many of these seasonal homes use little or no electricity eight to nine months out of the year.   In order to have all of our members pay their fair share to receive reliable electric service, we started charging a flat customer charge every month and reduced the cost per kilowatt-hour.   The $16 customer charge was previously included in the energy charge and is now a separate line item.
     This $16 charge for residential, stock wells and small commercial rates is actually much lower than the real cost to provide service.  Someday Midwest may need to go to a higher customer charge and pass the energy component to our customers at nearly the wholesale rate.   No matter how we do the math or change the formula to collect the revenues to remain in business, rest assured, we will not charge you a dime more than is needed to keep your lights on.  Please keep this in mind; Midwest is your non-profit electric cooperative.
     Thanks for your support and if you have more questions, please do not hesitate to give me a call.  Harvest is under way; please take a little more time on the road to make this a great and safe harvest.