What is a rate study?
A rate study is a professional study, usually by a third party entity, to determine whether both existing and future utility rates are sufficient to meet all of the utility’s needs and whether the rates need to be adjusted.
How are the numbers in a rate study determined?
- Developing revenue trends and expense trends based on history
- Assessing future capital needs
- Forecasting changes in customer base
- Projecting future years activity
Why do we use a third party to research and report the findings of a study?
The third party acts as a neutral agent that specializes in collecting data and analyzing resources, results and scenarios.
What is Boone REMC trying to accomplish?
We want all our members to pay a fair and equitable portion of electric costs to ensure the financial health of the cooperative for years to come.
How has the rate study affected Boone REMC members in the past?
In May 2018, a rate study was conducted that adjusted the member customer charge by 60 cents. Another rate study in Sept. 2007, went from $16 to $33.60. Currently, the charge is $34.20.
Consulting firm looks at rates
The Prime Group, a consulting firm, has been retained by REMC to perform a study of electrical retail rates.
The study was conducted in the first quarter of 2021 and included an analysis of all Boone REMC’s rate classes.
The main purpose of the review is to ensure Boone REMC’s electric rates:
- Are adequate to maintain a solid financial condition.
- Provide the necessary revenue for delivery of reliable electric service.
- Avoid subsidization between rate classes.
- Remain competitive with neighboring utilities.
The Prime Group the rate making process to the board in July and presented a few different scenarios to the board of Directors in August. Final decisions will be made in the next few months.