GUEST COMMENTARY | SMPA to Hold Rates Steady in 2014
by Kevin Ritter, SMPA General Manager
Jan 06, 2014 | 1221 views | 0 0 comments | 56 56 recommendations | email to a friend | print

I can't think of any better news to start the new year off with: At their December meeting, the San Miguel Power Board of Directors voted unanimously to approve the 2014 budget. In doing so, they also chose to hold our rates steady even though San Miguel Power is seeing a small increase in our wholesale power costs from our supplier, Tri-State Generation and Transmission Association, effective this month. SMPA is absorbing those costs in order to keep our members' rates steady.

How are we able to do that? There are three main factors. I'll give credit to SMPA's employees. They worked hard to set a budget last year that kept our operational costs low while still providing excellent service. And they did the same for 2014. I like to think of this as the cooperative difference. Second, the rate increases we've endured the past two years are still adequate to maintain our financial position.  And third, our kilowatt hour sales are recovering after a significant dip in 2012.

The cooperative difference plays a large part in how SMPA sets its rates, which are made up of two main components. The first was mentioned earlier: the actual cost of the wholesale power we buy from Tri-State. The second component is the cost for SMPA to get that power to you. This includes all other operational costs such as power poles, lines, maintenance, vehicles, buildings, employee wages and benefits and even the printing and mailing of bills.

Here's where the cooperative difference comes in. SMPA doesn't have any stockholders or private owners to earn a return for. We are a not-for-profit local cooperative, which means we're always working to provide you, our members, with both reliable and economical service.

We set our rates to simply recoup the costs of providing you with electric service, not with the intent to make a large profit. Any excess revenue collected, beyond costs, is allocated to each member account as patronage capital. Patronage capital, or capital credits as they are often called, represents your investment in the cooperative and all its assets. While capital credits are not returned every year, the board of directors that you elect considers at least once a year whether or not we can return some of these investment dollars to our members.

All of us at San Miguel Power wish you a very happy, healthy and prosperous new year.

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