Dear members -

I am often asked why our rates are so high. This is a fair question. There are several key factors that determine our rates from a historical perspective and looking ahead. NVEC was formed more than 75 years ago to serve a small group of people with no access to power. There was not enough return on the investment it would take to run the lines out to all the scattered accounts to motivate investor-owned utilities to branch out. The cost factors were and are very significant.

The areas we service cover parts of nine counties, and the long distances we travel make service work, outages and maintenance costly and time consuming. Our service territory is heavily wooded with rough terrain, creating more work and maintenance than urban areas.

I am also asked about the base charge. The fixed costs of servicing an account— regardless of how much energy is used—contains the labor, trucks, other equipment and operational expenses. The base charge on your power bill, which is $25 for residential members, covers only a small part of the cost of servicing and maintaining our system. If we were to charge the actual cost to maintain each account, the base charge would need to be about $100 per month instead of $25. This is determined through independent cost of service studies conducted every five years. Realistically, each account—like telephone and gas companies require—would pay the full amount of fixed costs. Because we do not charge the full amount, the kilowatt hour charge is higher. Our neighboring utilities have a more condensed service area with a larger number of consumer accounts, have a better balance of commercial and industrial loads compared to residential, and have more customers per mile. NVEC has more trees per mile that need to be maintained to protect our system. Our service territory sees minimal growth; the little growth we do see is primarily residential. This causes our rising costs to exceed our revenues.

Despite these challenges, we are your member-owned and -operated cooperative. We provide good service, are responsive to our members, manage costs the best we can and work to keep the lights on under any conditions. We are a not-for-profit utility that is focused on balancing our revenues and expenses. NVEC is committed to serving our member-owners at the lowest cost possible while providing safe and reliable electric service.

Steve Jones

General Manager, NVEC