Frequently Asked Questions about the Recent Rate Increase

Q: What type of rate increase should members expect?
A: All Southwestern Electric members will see a 9% increase in all billed charges across the board. The increase first took effect on their September 2009 usage and will continue indefinitely. The current plan is to raise rates an additional 8% in 2010 and 7% in 2011.

Q: Why is an increase needed?
A: Southwestern Electric has kept its revenue from rates below its actual power costs for a long time. In fact, it’s been 16 years since the co-op last raised rates. But our power costs are going way up. Just a few years ago we were paying $28.50 per megawatt hour, including transmission costs. As of 2010, that amount will be $52.50, which is an 84% increase. As a not-for-profit cooperative, we simply have to pass some of that increase through to our members.

Q: Why raise rates at this particular time?
A: Of course, raising rates is the last thing we want to do, especially during tough times. But the economic recession affects our costs, too. Rising prices of everyday items drive up the cost of doing business, much as it does for the everyday operation of a household.

Q: Why doesn’t the co-op just cut back on spending rather than raising rates?
A: We already run an extremely tight ship. That being said, we’re doing our part by making sure the operating budget is lower in 2010 than it was in 2009. But we’re not going to cut back to the point that we compromise the financial soundness of the organization or the level of service and reliability that our members deserve.

Q: Why isn’t just one rate increase enough?
A: Even with this rate increase, the cost of delivering power is still higher than the revenue we bring in from providing electricity to our members. Keep in mind that during recent years we’ve lowered rates a total of 18.5%, paid out about $1.4 million in capital credits, and twice gave a month’s free electricity to everyone on our lines. Those were great times, but we knew they couldn’t last forever. In order to keep your cooperative financially sound over the long haul, we simply have to bring rates up to modern levels.

Q: When was the decision made to raise rates?
A: It was about two years ago when we first announced that rates would be going up in 2009. The board of directors approved this rate structure at its August 2009 meeting..