SMECO files to reduce distribution rates

8/1/2017 2:30:00 PM - by SMECO

Southern Maryland Electric Cooperative (SMECO) submitted a filing to the Maryland Public Service Commission (PSC) on August 1, 2017, to reduce its Distribution Service charges for customers. The lower rates are the result of a redistribution of SMECO’s transmission costs, which will save SMECO customers more than $1.85 million per year. The new rates are expected to go into effect in February 2018, if approved.

In November 2014, SMECO completed its Southern Maryland Reliability Project transmission system upgrade. SMECO’s 230,000-volt loop—which includes the Reliability Project, as well as the Ryceville to Hewitt Road line and other 230-kilovolt facilities—helps to ensure reliable service for all of SMECO’s customer-members. After meeting strict requirements for utilities with transmission facilities greater than 100,000 volts, regulatory agencies registered SMECO as a transmission owner in January 2017.

“SMECO’s primary objective in investing in its transmission facilities is to better serve our customers in terms of reliability and capacity; however, these facilities will also offer benefits to the entire regional high-voltage grid. Now that other utilities’ customers will benefit, they will also share the cost,” said Austin J. Slater, SMECO president and CEO. “The costs for transmission facilities throughout a region are paid for by all the customers within that region, and this sharing of costs will reduce the monthly bill for SMECO’s customers,” Slater explained.

In preparation for the rate filing, SMECO conducted a cost-of-service study to evaluate the expenses the Cooperative incurs to serve its customers. Items such as new line construction, transformer replacement, and underground cable repairs are included. SMECO re-examined these and other costs to ensure that charges will be properly aligned with expenses. In addition, SMECO has taken cost-cutting initiatives, such as reducing staff, decreasing the number of vehicles in its fleet, and consolidating offices. While the costs to serve customers have increased over the past few years, the net cost-of-service increase is outweighed by the decrease resulting from SMECO’s cost-cutting measures and the redistribution of the Cooperative’s transmission costs. 

In a separate matter, SMECO filed with the PSC on May 31 to reduce its base energy charges by more than 10 percent for residential customers. The new rates will go into effect August 1, 2017, and at $0.065829 per kWh, the base energy charges have not been this low in more than 12 years.

If approved as filed, the new distribution rate, along with the lower energy rate, will reduce a residential customer’s bill by nearly eight percent. A February bill for 1,300 kWh will be $13.53 less in 2018 than it was in 2017.

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