Submitted by Orcas Power and Light Cooperative
Colder temperatures in 2017 brought in greater revenue than projected and, as a result, all OPALCO co-op members who paid a bill for any part of 2017 will receive a credit on their last bill in December. The total amount to be credited back to the member-owners will be in the range of $750 – 950K (TBD after close of November business); residential members with average energy usage will see a credit of about $50.
Back in 2015 when warmer temperatures caused a reduction in co-op revenues, the Board put Policy 29: Rate Design into effect with an Energy Charge Adjustment (22.214.171.124.8). The Energy Charge Adjustment provides a variable mechanism to balance fluctuations in energy revenues, positive or negative. To balance the lost revenues in 2015, members paid a “Revenue Recovery Add-On” line item on their bills. In this case, members will see an “Energy Charge Adjustment” line item on their December 2017 bill with a credit amount.
OPALCO is a non-profit cooperative that operates at the cost of service. The budget process forecasts weather, energy purchases and expenses and then rates are set to meet those costs with a margin at year-end sufficient to pay out capital credits and meet equity requirements. The margin is returned to members as capital credits on a 25-year cycle. A surplus margin, such as occurred in 2017, doesn’t benefit the Co-op budget for the next year and creates a larger capital credit obligation on the backs of members in 25 years. The Board decided to put the dollars in members’ hands now instead of waiting 25 years.
The 2017 margin was trending toward about $3 million as the third quarter came to a close. Estimating weather (temperatures) and year-end expense, the Board decided to adjust the margin to return a portion to the membership, increase capital credit distributions to include approximately 45 percent of next year’s obligation and create a Board Restricted Fund of approximately $500,000 to cover unforeseen emergencies or opportunities.
If you have questions or comments about this energy charge adjustment bill credit, please join us for a live streaming event on Facebook scheduled for 10 a.m. on Tuesday, Dec. 12. Staff will be discussing the bill credit and answering questions.