I'm sure that many of you have read reports and newspaper articles about the substantial rate increases that are scheduled to

Due to the new Automated Meter Reading (AMR) System, many SouthEastern members are now receiving an invoice for the first time in the history of their service with the Cooperative.  These invoices provide the member with more information than was historically available through the self-read, self-billed system.  This month, I would like to explain the individual charges that appear on an invoice and also explain a new charge or credit that will begin appearing on invoices beginning in January, 2007.

The first charge I would like to explain is the customer charge.  This is not a new charge and has always been included in the amount paid in the past although you didn't see the charge broken out separately.  This charge is the minimum amount charged by the Cooperative to make electric service available to the property regardless of the amount of energy used.  Your Cooperative invests in facilities such as substation equipment, transformers, distribution line, distribution poles, voltage regulators, meters, etc and incurs additional expenses such as interest expense, billing expense and administration expense that are all required  to make service available at any location whether energy is consumed or not.  The customer charge is not high enough to cover all of these fixed costs and the remaining fixed costs are recovered in a tiered energy rate.  Your Cooperative is currently reviewing the customer charges in all rate classes and will be increasing this customer charge as part of the general rate increase beginning January, 2007.

The next charge I would like to explain is the energy charge.  The largest cost component of the energy charge is the wholesale power cost which is what your Cooperative pays its power supplier, Southern Illinois Power Cooperative, to generate the energy and deliver it to SouthEastern's substations.  As mentioned above, the energy charge is tiered to help recover a portion of the Cooperative's fixed costs as well.  This explains why the first block of energy is charged at a slightly higher rate than subsequent energy blocks.  As the monthly energy consumption increases, the cost per kwh begins to decrease. 

Another charge that can be seen on the invoice is the public utility tax.  Again, this is not a new charge but members have not seen the charge broken out separately on an invoice.  This tax is collected and paid by SouthEastern to the Department of Revenue.

One additional charge or possibly a credit that will be added to all invoices received starting in January 2007 will be titled the wholesale power cost adjustment charge.  SouthEastern's power supplier, Southern Illinois Power Cooperative in Marion, does not have enough generating capacity during peak periods of the year to serve its members and must purchase additional power from other generating plants.  The price of this power purchased during peak periods is market driven and can be very difficult to predict.  Driving forces such as weather, generating unit outages, price of natural gas, price of coal, etc. all contribute to the volatility in the price of this purchased power.  The cost of this purchased power is passed along to your Cooperative and now your Cooperative has created a way to only pass along any unexpected changes in the costs of this purchased power to its members.  By creating this wholesale power cost adjustment charge, your Cooperative will only pass along incremental changes in the price of its wholesale power.  This wholesale power cost adjustment charge may be a small charge if the wholesale costs are higher than anticipated or a small credit if the wholesale costs are lower than expected.  This will allow your Cooperative to only collect what is needed to cover these changes in wholesale power costs.

There are additional charges that appear on invoices for business and large commercial accounts.  I will explain these charges in a future column.  I hope this helps explain the charges that many of you are seeing for the first time although these charges have always been there with the exception of one new charge that you can expect to see starting in January 2007.  The invoices contain a lot of valuable information that we think you will find helpful in understanding your electric bill.

See you next month and as always, "We'll keep the lights on for you."