SMECO Applies for Rate Reduction

May 31, 2017

Southern Maryland Electric Cooperative (SMECO) submitted a filing to the Maryland Public Service Commission on May 31, 2017, to reduce its base energy charges by more than 10 percent for residential customers. If approved, the lower rates will go into effect with August 2017 bills.

Austin J. Slater, Jr., SMECO president and CEO, explained, “Our residential base rate for August will be the lowest it has been in 12 years. Base rates for all customers—commercial accounts, schools, government buildings, and churches—will be reduced across the board. The base rate for an average residential customer with 1,300 kilowatt-hours (kWh) of monthly usage will be nearly $9 less in August than in July.”

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 consistently been reflected in the PCA, which has been a credit for 30 of the last 34 months.

“We work diligently to manage SMECO’s power portfolio. We purchase energy using a combination of long-term and short-term contracts, as well as base load and peak load contracts. Lower rates can make a huge impact, especially on facilities that use a lot of energy,” Slater added. “When SMECO reduces energy costs, those savings are passed on to customers—that’s the value of a cooperative.”

SMECO’s base residential energy charges for summer will decrease by 8.76 percent, from 7.53 cents per kWh to 6.87 cents per kWh. Summer energy charges appear on bills rendered May through September. Base residential winter energy charges will be reduced from 8.13 cents per kWh to7.2 cents per kWh, an 11.44 percent reduction. The reduction for winter and summer months combined total about 10 percent on average.

The PCA, which changes monthly, is a credit of 0.4727 cents per kWh for June. The combination of the base energy charge and the PCA credit effectively reduces the SOS rate from 7.53 cents per kWh to 7.0573 cents per kWh.

SMECO – The Cooperative Difference

Eighty years ago, when rural areas needed electricity, cooperatives were created. Visionary men and women helped to form the Southern Maryland Electric Cooperative (SMECO). SMECO now provides electric service to more than 160,000 customers in Charles County, St. Mary’s County, southern Prince George’s County, and most of Calvert County.

Cooperatives are distinctly different from investor-owned utilities because co-ops are owned by their customers. Customer-members elect the men and women who serve on the Board of Directors. Customer-members share the responsibility of ownership by financing the cooperative’s operations, but they also share its rewards.

Each year, SMECO’s margins—revenue less expenses—are allocated to customers’ capital credit accounts. SMECO uses margins as working capital for new construction and system improvements. Then, whenever the Board of Directors determines that the financial condition of the co-op warrants, members receive a refund.

As a cooperative, SMECO will always put its members first and be responsive, reliable, and resourceful—the power you can count on.

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