At Valley Rural Electric Cooperative, we do our best to anticipate wholesale power costs in the development of our electric rates. Unfortunately, current electric prices are very volatile.
Valley REC obtains wholesale power from its supplier at a rate based on historical data on energy costs. Set in advance, such an averaged rate cannot reflect unpredictable changes and fluctuations in the present wholesale power market. These factors may include drastic weather patterns, such as hot or cold temperatures, that increase energy use or dramatic increases in the price of fuels that affect every business sector.
Should the cooperative determine at any time that its average cost for generation and transmission is or will become more or less than estimated for any rate class, the cooperative may apply a price adjustment to any generation and transmission rate to compensate for the difference. Otherwise, the purchase power adjustment shall be zero.
The purchased power adjustment is imposed across the board so that consumers who use more electricity pay more of the freight. Each member is asked to pay only his or her fair share of the additional costs. It is the most equitable method of obtaining the revenue needed to meet the expense of providing power to our consumers.