SVEC must be able to fully and fairly recover the costs related to providing service to its members, while maintaining adequate margins to cover planned and unplanned expenses including storm damage, system upgrades to meet demand, and maintenance to ensure reliability and safety.
The basic consumer charge covers a large portion of the fixed costs of having a member connected to the SVEC distribution system. The fixed-cost component seeks to recover the cost, as much as possible, of what is needed to make service available to every member. Even if a member never uses a single watt of electricity, the cooperative incurs costs for constructing, operating and maintaining those facilities, including meters, transformers, poles and distribution power lines. The cooperative is responsible for scheduled and unscheduled maintenance of that equipment to ensure the member receives safe and reliable service, creating additional costs to be recovered. Further, the consumer charge also recovers costs for member-facing services such as Member Services Representatives and billing operations.
It is also worth noting through the cost-of-service study, the rate consultant determined to fully recover costs through the basic consumer charge, the amount would be $32.31 for single-phase residential members. The proposed change still does not fully reflect the true cost of serving every co-op member.