The onset of a worldwide pandemic made 2020 a year for the record books and one not soon forgotten. Despite the numerous challenges dealt by COVID-19, Victory Electric ended 2020 on a positive note. In addition to refunding $2.1 million in capital credits to our members in December, Victory Electric also added a little brightness to the holiday season with an electric rate reduction in November and December.
The rate reduction on the member’s electric bill was through the Energy Cost Adjustment (ECA). With a credit ECA of 1.3₵ per kWh in November and a 1.5₵ per kWh credit in December, members received a combined average savings of $24 on the average residential electric bill of $112.50.
While prices seem to be on the rise for many other utilities, Victory Electric is extremely proud to pass on any rate savings to our members. We hope it is a welcome relief that offers members a light at the end of the tunnel, and ultimately helps keep our communities economically viable and strong.
Why an ECA matters
Victory Electric’s base energy prices are purposely set for long intervals, often years, in an effort to keep prices steady and protect our members from market volatility. In addition to wholesale power costs, the base energy charge includes components such as fixed infrastructure costs, overhead and maintenance, property taxes and interest expense.
Because of the complexity and financial investment involved with changing base rates regularly, there can often be a time lag between changes in the wholesale rate and the retail energy price. The ECA allows the cooperative to respond to market fluctuations without implementing a rate change.
Each month through the ECA, electric bills are adjusted either up or down to account for abnormal “variable” power supply costs. These variables determine how much our power supplier incurs or saves in the process of generating power, to include fuel costs like coal and natural gas, power purchases, and the cost of transmission to deliver the power to Victory Electric’s system.
When the cost of wholesale power decreases significantly like it did in November and December, the ECA gives Victory Electric an avenue and the capability of immediately passing the savings on to our members. The ECA is a pass-through bill adjustment to our power suppliers, and Victory Electric’s margins are not increased or decreased by the ECA.
Based on rate data gathered from the U.S. Energy Information Administration, Victory Electric continues to provide some of the lowest electric rates in the state of Kansas. While energy markets, weather, natural gas supplies and prices and government regulations constantly fluctuate and influence energy prices, our dedication to finding ways of decreasing the cost of power for our members reinforces Victory Electric’s commitment to providing safe, reliable power at an affordable price.