“THE FAIR SHARE PLAN”

QUESTIONS & ANSWERS

Are Claverack’s rates increasing?
No, specific charges which make up your bill are changing. Some members will see a slight increase in their average monthly bill, and some members will see a slight decrease. This structure makes rates fair for all members.

When will the new rates take effect ?
The new rates will be applied to member’s bills in April.

What are the significant changes?
The Fixed Cost Recovery Charge (FCR) is eliminated. The 2008 generation pass through rate is set at 6.245¢ per kilowatt hour for residential, seasonal and small commercial accounts. The monthly cost of service charge increases, and the per kilowatt hour distribution charge decreases. Under this rate structure all members will pay the same cost of service fee and rates, regardless of how much electricity they use.

How will this change affect our members?
Residential & Seasonal:
Monthly cost of service charge increases from $17 to $26.70. The per kilowatt hour distribution rate decreases to .02864.

Residential members who use less than 695 kilowatt hours per month will see an increase in their normal bill, and members using more than 695 kilowatt hours will see a decrease in their normal bill.

Seasonal members using less than 225 kilowatt hours per month will see an increase in their normal bill, and members using more than 225 kilowatt hours will see a decrease in their normal bill.

Pole Lights:
Monthly cost of service charge increases from $9.50 to $11.50.

TOU members:
Monthly cost of service charge increases from $20 to $30.

Impact will depend on total consumption and the percentage of consumption during off-peak hours.

Members using less than 1500 kilowatt hours per month will see an increase in their normal bill, and members using more than 1500 kilowatt hours will see a decrease in their normal bill.

*30% on peak/70% off peak electrical consumption is required for members to save money on this rate.

Why are we changing our rates?
There were several reasons we decided our rates needed to be reviewed. The first was related to a change in our cost structure for wholesale power from our power supplier. We also realized that unless rates are examined and updated periodically, some rate payers end up paying an unfair share of the costs involved in operating the cooperative. Additionally, because of the potential for changes in members’ electric-use patterns due to fluctuating weather conditions, conservation efforts and self generation of power, we wanted to be sure that our rate structure would be able to protect the financial strength of the cooperative.

The costs associated with providing service to a member can be broken into two categories; fixed costs and variable costs. The fixed costs are those costs that do not vary with member usage such as billing, metering costs, some administrative costs and the costs associated with that portion of our electric system that is necessary to provide basic electricity to your meter without consumption. The variable costs, which are recovered in the per kWh charge(s) on your bill, are those costs that vary with member electric consumption.

The cost of service fee is intended to recover the fixed costs, but if left unchanged over time will be too low to recover these actual costs. Those fixed costs then must be collected through the per kWh distribution rate. Essentially, higher use members end up paying more than their fair share of the fixed costs, while members who use less electricity pay less than their fair share.

While it may appear that the new rates don’t provide an incentive for our members to conserve, we believe that because we no longer need to encourage consumption in order to cover our fixed operating expenses, we are in a better position to help members use less. Additionally the old rate encouraged members to use more electricity rather than conserve as the rate structure gave members a lower per kilowatt hour rate for all use above 500 kilowatt hours. Under the new rate every kilowatt hour that is not consumed saves the member approximately nine cents. The new rates enable us to promote programs to help members conserve without negatively impacting our financial strength and our ability to provide reliable electric service.

We realize some members who use little electricity will see a slight increase in their monthly bill (someone using no electricity at all will see an increase of $9.70 monthly to cover those fixed costs). Although members who have little consumption will pay a little more when compared to the old rate, all members will be paying the same fair rate.