In a letter to members last week, Central Virginia Electric Cooperative (CVEC) President Gary Wood announced that the company is planning to file a request with the State Corporation Commission (SCC) for a rate increase of between 6 and 7 percent.
Citing increased costs for purchasing power from both Dominion and Appalachian Power and generally flat sales over the past nine years, Wood said the company had little choice but to ask for the rate change.
“CVEC is a not-for-profit and we manage with thin margins, but the increased costs over the years have resulted in margins near the acceptable limit for our lenders and other creditors,” he wrote.
This will be the fourth request for rate hikes in eight years. In 2012 the company requested a general rate increase of 24.8 percent, with smaller increases of 5.2 percent in 2010 and just under 2 percent in 2016.
“Over half of the increases since 2010 have been used to pay for new investments in increased reliability and increased capital credit refunds,” CVEC communication manager Melissa Gay said in an email. “Reliability investments have resulted in a record-setting year for low outage time in 2017.”
According to information provided by the company, the average total outage time in 2015 was 250 minutes, but in 2017 was only 143 minutes. During that period, the company invested millions in clearing vegetation and improving distribution lines.
Gay added that the cooperative, which is member-owned, has paid out annual capital credit refunds totaling $10 million over the past eight years.
Wood said the company had worked to find alternate ways to increase margins in recent years, including offering early retirement to senior employees and restructuring debts, and staff had worked to keep budget increases to about half a percent annually.
But with January and February 2017’s generally mild weather depressing expected sales and an increase in transmission fees of about $6 million from Dominion Power and Appalachian Power, the board of directors felt there was little choice but to ask for a rate increase.
Neither the company’s new $110 million broadband access project or the solar energy project played a role in the decision. CVEC had previously announced that the broadband project will be spun off into a separate company.
The rate increase request will be submitted to the SCC by June 29, and will then begin the months-long process of investigations and hearings before the commission makes a final decision.
Customers, however, won’t have long to wait before they see the impact on their monthly bills. Gay said the company will ask the SCC for permission for an interim rate increase during the review period, and hopes to have the new rate in place by October.
Fluvanna County is serviced by two power companies: CVEC, which powers 8,747 households, and Dominion Virginia Power, which serves 3,361.
