Sam Houston Electric Cooperative

News > The Value of Electricity >Frequently Asked Questions: 2006 Rate Adjustment

Q. What is the total change in my bill?

A. Not much. Using a PCRF of $.027 per kWh based on November 2005, the increase to your bill will be $2.90 per 1,000 kWh compared to current summer rate and $7.90 per 1,000 kWh compared to current winter rate.

SUMMER		WINTER			REVISED RATE

7.49 ¢	(Energy)	6.99 ¢	(Energy)		3.34 ¢	(Delivery)
2.70 ¢	(PCRF)	2.70 ¢	(PCRF)		7.14 ¢	(Energy)

10.19 ¢	(Total)	9.69 ¢	(Total)		10.48 ¢	Total

BASE (Current)				BASE (Revised)
$9.75				$12.75

Q. What happened to the summer/winter differential?

A. In order to minimize the rate adjustment, the summer and winter rates will be the same.

Q. What is the base cost?

A. The "base cost" covers the expenses associated with having a meter at your home, including monthly readings, billings, repairs, meter testing, and maintenance of your electric service. The base charge, which has been $9.75 for more than 10 years, is now $12.75.

Q. What is the delivery cost?

A. The "delivery cost" represents the price of delivering power to your home. This cost allows us to maintain the substations, poles and distribution lines that deliver electricity and to implement necessary upgrades. Part of the delivery cost also goes to the upkeep of right-of-way areas surrounding distribution lines.

Q. What is the energy cost?

A. The "energy cost" reflects the rates to purchase electricity for our members. This is the cost to get power to Sam Houston EC so that we can deliver it to you. This line item on your monthly statement will more precisely reflect the actual cost of the electricity we purchase for you.

Q. How do Sam Houston Electric Cooperative prices compare with other utilities?

A. Sam Houston EC's rates are very competitive with other utilities and on an average basis, generally lower than those of other utilities serving Texas consumers in the deregulated ERCOT region. Based on our recent research, our new residential rate of $117.55 per 1,000 kWh is 15 percent lower than the lowest priced retail electric provider in the Greater Houston Area as of May 25.

Q. What is Sam Houston EC doing to hold down costs?

A. Sam Houston EC strives to operate efficiently while sticking to our mission of providing affordable, high-quality and reliable electric services. We're always looking for ways to manage costs, which includes working with nine other East Texas cooperatives to secure additional sources of coal generation, thereby reducing our dependency on natural gas.

Sam Houston Electric has not raised it rates in 14 years. We've minimized increases by managing costs and implementing a number of cost-saving measures, strategic planning efforts and by passing on reductions in our cost of power from our wholesale providers.

Q. Why is my increase different than the notice amount?

A. The official notice amount provides amounts of average increases according to rate class. If your usage is more or less than the average, your price adjustment may vary. We encourage our member-owners to call our office at 1-800 458-0381 if they have any questions regarding their specific price adjustment.

Q. When can we expect the next rate increase?

A. We haven't had a rate increase in since 1992. Lots of things come into play that can affect rates. Many of these are unplanned and can be tied to rising costs for coal, natural gas, etc., as well as storm damage. We promise to do our best to minimize the impacts of these issues by being proactive in our planning, offering education and training on energy efficiency programs and focusing on maintaining the reliability, quality and integrity of our systems.

Q. What are some ways I can manage my bill?

A. Sam Houston Electric offers a number of options to help you manage your electric bill. Some of those services include automatic payment options, budget billing and energy audits. If you are interested in learning more about these services, contact a Member Services Representative at 1-800-458-0381.

Q. Was Hurricane Rita the cause of the rate adjustment?

A. Hurricane Rita is not the direct cause of the rate adjustment, but it may have hastened the need for an adjustment. Following close on the heels of Hurricane Katrina and just before Wilma, the 2005 Atlantic basin hurricane season, along with increased global demand for energy, sent commodities such as oil and natural gas soaring to all-time highs.

While we have a fuel mix that for the most part cushions the blow of volatile fuel prices, the historic high fuel prices along with the rising cost of material such as poles, steel, ceramics and diesel are the driving forces behind this rate adjustment.

That said, Sam Houston EC has spent more than $35 million covering the restoration and recovery costs following Hurricane Rita and the process continues. We expect FEMA to reimburse the Co-op nearly 75 percent of our expenditures, but the money to cover the balance will from our reserves. We estimate that the storm cost amount to 0.5¢ per kWh, which is $5 a month on a 1,000 kWh bill. The financial strength of the Cooperative allowed us to weather the storm and we will depend on our continued financial stability in the future as a safeguard against future natural disasters.

Q. How is the Cooperative timing its communications about the rate adjustment?

A. It is Sam Houston EC's goal to pass pricing information on to our member-owners in a timely manner. Typically, a planned increase allows time to tell member-owners when a price adjustment can be expected. Increases due to factors such as rising fuel prices; unexpected, increased purchased power costs; inflation pressures; increased demand during peak generation periods; and power interruptions due to repairing and rebuilding lines due to storm damage, often give us less time to communicate about pricing adjustments.

Sam Houston EC strives to give our member-owners as much notice as possible through a variety of methods. This may include newsletter articles, bill stuffers, news releases, etc.