Letter to the Editor

Readers reminded of electric rate increase

Thursday, May 18, 2006

To the community:

It has been more than 17 years since the member/owners of Barry Electric Cooperative have had an increase in their electric rates. The Cooperative's rates to its members have remained unchanged since April of 1989. An increase in wholesale power costs, along with increased operative and maintenance costs, have brought about the need to raise rates effective with the billing that goes out the last part of May, which will be due in June.

Associated Electric Cooperative, the generator of the electricity that is used by Barry Electric's members, has increased rate to its members. The wholesale rate increase became effective with the April 2006 billing. Associated has indicated that it will raise wholesale electricity rates again in 2008 and every two years thereafter through 2016.

It is anticipated that wholesale rates could increase by as much as 50 percent over the next 10 years. Wholesale power costs are about 65 percent of Barry Electric Cooperative's operative costs. An increase in power costs affects Barry Electric's operating costs significantly.

Associated's need for rate increases is brought about by the requirement to meet ever-increasing clean air and other environmental regulations, as well as the need for increased generative capacity to meet the increased demand for electricity by the more than 450,000 consumers Associated generates electricity for. It is estimated that the cost of installing the equipment to meet the clean air standards and to build additional generating facilities will be from $1.6 to $1.8 billion over the next 10 years.

On the local level, Barry Electric is just like you, in that over the past 17 years we have seen the operating and maintenance costs of the cooperative increase significantly. Gasoline and diesel prices have doubled from $1.12 a gallon for gas in 1989 to more than $2.60 a gallon today and diesel has gone up even more than gasoline. The price of the poles, transformers, meters, wire and hardware have also increased significantly.

A number of changes in the daily operation have been implemented over the last several years in an ongoing effort to control costs. An automated meter reading system, along with automated mapping and staking systems, have been put into place. High efficiency transformers and other equipment and increased right-of-way maintenance are used to help control line loss.

The combination of increased wholesale power costs and increased operating and maintenance costs brought about the need for an increase in rates to ensure that Barry Electric remains financially stable. The rate increase per class of user (farm and home, small commercial, large power, etc.) is based on a cost-of-service and rate study conducted by Toth and Associated.

Your electric bill contains two or more components depending on what rate schedule your account is billed under. The farm and home rate (the rate the majority of Barry Electric's members pay) is made up of an availability charge and an energy charge. The availability charge or minimum bill on the Farm and Home rate will increase from $6 to $10 per month.

Energy charge increases will range from 1 mill to 8 mills per kilowatt hour depending on usage and rate the account is billed under. The current charge for 1,000 kilowatt hours on the farm and home rate, including the availability charge and energy charges, is $66.70. The new rate for 1,000 kilowatt hours on the farm and home rate, including the availability charge and energy charges, is $78.

Even with the increase, Barry Electric Cooperative's rates will still be less than neighboring electric cooperatives' and investor-owned electric utility's rates. Small commercial and large power users will also see increases in their availability charges, energy charges and demand charges. Security light charges will increase by $.80 per month from $5.10 per month the $5.90 per month for 175-watt mercury vapor lights. The charge for 400-watt high pressure sodium lights will also increase.

The decision to increase rates was made after careful consideration of the factors involved, current and projected wholesale rate increases, increased operating and maintenance costs and the need to keep the cooperative financially sound in order to provide you the member with the best service possible consistent with sound business practices.


The Barry Electric Cooperative Board of Directors

Cassville, Missouri