SMECO Files to Reduce Energy Charges

HUGHESVILLE, Md.—Southern Maryland Electric Cooperative (SMECO) has filed an application with the Maryland Public Service Commission (PSC) to reduce its energy charges by more than 12 percent for residential customers.

SMECO is filing to reduce the residential winter energy charge from 9.25 cents per kilowatt-hour (kWh) to 8.13 cents per kWh. Winter energy charges appear on bills rendered October through April. Residential energy charges for summer will decrease from 8.61 cents per kWh to 7.53 cents per kWh, a reduction of 12.5 percent. The filing was submitted February 27, and, if approved by the PSC, the reduced charge will appear on customer-members' May 2015 bills.

Austin J. Slater, Jr., SMECO president and CEO, explained, "The cost of energy makes up the largest portion of the monthly bill. So this energy rate decrease-which affects residential customers, commercial customers, schools, government and sports facilities, and even street lights-will deliver substantial savings to customers. And this rate reduction is significant. The average residential customer with monthly usage of 1,300 kWh this summer will save about $17 each month as compared to last summer.

Slater added, "As a cooperative, we are happy to provide reduced energy rates to our customer-members, because SMECO does not make a profit on energy charges. The value of the cooperative business model, in which savings are passed on to customers, distinguishes us from other energy companies."

SMECO uses a portfolio approach to purchasing power, aggregating power supply agreements with a variety of suppliers to purchase energy for its base load and peak load. SMECO's residential energy rates peaked in the summer of 2009 at 12.53 cents per kWh. Prices for energy peaked again in March 2014 throughout the northeast because of the dramatic drop in temperatures which resulted in an increased use of electricity.

"The co-op's power portfolio produces stable energy rates and helps to save money for customer-members overall," Slater said. "Natural gas prices are down about 34% from last year, which helps to lower the cost of power supply for SMECO. We project our cost for the energy portion of wholesale power to be more than 17% lower than last year, and these savings are passed on to our customer-members."

SMECO's Standard Offer Service (SOS) rate is made up of the energy charge and the Power Cost Adjustment (PCA). On SMECO's monthly electric bills, lower power supply costs have been reflected in the PCA, which has been a credit every month since September 2014. With the PCA credit, the SOS rate for February was, in effect, reduced from 9.25 cents per kWh to 8.60 cents per kWh. The total SOS rate in May will be the combination of the new reduced energy charge and the PCA, which changes monthly.

Source: SMECO

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