Back in the March issue of our newsletter we discussed that our co-op would be conducting a cost-of-service study because of the unprecedented rising costs we have experienced in our industry.
Currently, the independent consultant is finalizing their cost-of-service analysis. Any rate schedule changes made by the independent consultant will ensure our rates continue to provide enough revenue to cover our co-op’s expenses and meet our lender’s financial requirements.
We anticipate the cost-of-service study to be completed by the end of the year. In the meantime, our internal analysis has identified that our forecasts for energy sales may not be sufficient to ensure we meet our financial lenders’ requirements which guarantee us proper financial stability.
In the meantime, the board of directors has approved a modification to our Wholesale Power Cost Adjustment Rider to aid us in ensuring that Piedmont Electric Cooperative maintains the financial strength that our members expect. Please refer to the official notice below for more information on this modified rate rider.
OFFICIAL NOTICE
Piedmont Electric Cooperative has made a change to the Wholesale Power Cost Adjustment Clause Rider (WPCA) to reflect an additional component that will maintain the financial strength of the cooperative.
This requirement ensures that your cooperative adheres to the United States Department of Agriculture’s Rural Utility Service financial borrowing rules. These financial borrowing rules include a revenue requirement called the Times Interest Earned Ratio (TIER). TIER is a measure of financial performance which includes the cooperative’s net margins plus annual interest expense on long-term debt divided by the annual interest expense on long-term debt.
This TIER adjustment has been added to the Wholesale Power Cost Rider and is now entitled the Wholesale Power and TIER Adjustment Rider (WPTA). The WPTA rider enables the cooperative to collect the revenue needed prior to the completion of the cost-of-service study to ensure our financial strength meets our lenders’ requirements. The new WPTA rider is effective Sept. 1, 2023.
Piedmont Electric has taken steps to avoid cost increases as long as we can. Steps taken have included delaying construction projects that do not impact reliability, streamlining processes and sharing the cost of services with other electric cooperatives. The unprecedented price increases we have seen in materials, equipment and contract labor have resulted in the need to modify this rate schedule.
We know this TIER adjustment may impact members and we are here to help. If you need assistance, please contact us at 800.222.3107 or info@pemc.coop for information on bill payment assistance, money-saving tips and programs that can help offset some of the cost increases.