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Rate increase will take effect in October

KEYSTONE HEIGHTS -- Due to declining power sales and a decline in revenue the past few years, Clay Electric Cooperative will implement a small increase in its residential electricity rates, effective in October. Clay members use, on average, 1,171 kilowatt hours (kWh) of electricity per month, and these members will see a 3.5 percent increase in their bill.

General Manager/CEO Ricky Davis announced the rate increase in his July Kilowatt message.

“It’s a difficult time to announce a rate increase, because many of our members are already financially strapped due to cost increases for many other essentials, like food and fuel,” Davis said.

Davis said the co-op’s power sales have been on a decline in recent years. Reasons include a sluggish economy and membership growth that has “flatlined” the past few years. Other negative conditions include persistent unemployment, lagging job growth and a high rate of home foreclosures in Clay’s 14-county service area.

The rate increase will appear on members’ bills beginning on October 4. The 3.5 percent increase includes the slightly higher energy charge (from $0.0748/kWh to $0.0763/kWh) and a $3 increase in the customer charge. The customer charge, currently $14, will go to $17. A customer charge is common among electric utilities and it helps utilities recover the fixed costs of the equipment, poles, wire and transformers necessary to get power to customers’ accounts. The cost of these items has gone up considerably in recent years.

Davis said he is proud that Clay Electric has been able to offer its members some of the lowest rates in the state in recent years, and that even with the rate increase, Clay will still be very competitive with other utilities.

To hold the line on the co-op’s internal expenses, Davis announced a number of cost-saving measures to be implemented.

Cutbacks include laying off a contract crew involved in painting padmount transformers and a contract crew handling ground-line pole treating.

The co-op is also evaluating its Vegetation Management program for possible savings, and a top-to-bottom review of the co-op’s construction and maintenance program will be done to ensure proper focus.

Davis said next year’s budget will be a bare-bones spending plan, and everything will be closely scrutinized.

A five-year building program that addressed a need to replace aging buildings is also being put on hold.

“These types of capital expenditures don’t affect our expenses all that much because the money is borrowed and paid back over a long period, but I think it’s wise to put these projects on hold,” Davis said.