Co-op holding rate increases to an average of 1% per year, maintaining affordability and reliability.
Most consumers know things are getting more expensive at a higher and faster rate than ever.
Take milk as 1 example; the U.S. Bureau of Labor Statistics says the average price for a gallon of milk went up 15.2% in just 1 year, from $3.55 in 2021 to $4.09 in 2022.
When it comes to housing, the year-over-year inflation rate for rentals rose from 5.8 percent as of June 2022 to 8.4 percent as of last May, according to Zillow.
That’s why, in any area of the economy and for any commodity or service, a cost increase of 1 percent per year would be considered not only a bargain, but an amazing accomplishment.
But that’s what Graham County Electric Cooperative (GCEC) has been able to do with electricity rates.
“We are in the middle of a rate case where we’re looking at a 7% all-meter charge, what you are charged to have a meter at your home, regardless of the electricity or energy you’re using,” said Phil Cook, GCEC general manager. “We’re looking at zero increase for the cost of energy.”
“The 2024 electric rate increase will only be the 6th increase since 1993 with our last electric rate case in 2018, which is reasonable, especially when you consider our costs are rising each year and many of them at a much higher rate than inflation,” Cook said.
The co-op asked for a third-party assessment of its rate structure to justify any rate increase.
“We used an outside consultant to look at our revenues, costs, and projects and come back with a recommendation for a rate structure, so they don’t just come back with a number and say ‘you need to increase your rates,’ they come back and provide a recommended rate structure for your basic meter charge, and for your energy charge.”
GCEC Members last year were notified of the pending rate case, which will be decided by the Arizona Corporation Commission this spring.
The reasons for the rate case are the same as the challenges facing the co-op’s water system.
“We have aging infrastructure on the electric side as well as increased demand; our residential areas continue to grow and this creates challenges; in 2023 we averaged about 30 estimates a month for new services.
“We have substations that were built in the 60s, these substations have been in place with minimal upgrades for many, many years; 5 of the 10 on our system have nameplate data from the 60s, and to hold down costs and maintain reliability we work aggressively on preventative maintenance programs,” said Cook.
“We complete preventive maintenance and testing on our transformers and other parts of the system that help us determine equipment replacement schedules. As an example, a best practice we are implementing is replacing substation transformers that are more than 40 years old,” Cook said.
Another critical component – the poles that carry the electric lines – are also managed with an aggressive preventative maintenance program, and that includes “vegetation management.”
“We’ve been working aggressively on our vegetation management to keep tree limbs and ground vegetation from our lines and infrastructure, using a contractor who is trained in that and does it for a living; it’s more cost-effective and it increases system reliability, which also saves money.”
Cook said this allows the co-op to focus more on pole replacement to ensure aging poles susceptible to winds or conditions that could take them down are replaced before that happens.
“This is ongoing, every year we contract for inspections on our system and they test the poles and categorize them; high-reject poles are what we focus on as they’re most apt to break.”
Still, extreme weather events can bring down even the strongest poles – and the co-op’s been able to maintain reliability when those events strike.
“Reliability’s been high; we’re always dealing with monsoon and storm issues but even when we lost 17 poles last fall, we have redundancy, so we were able to restore power in about 2 hours. It took a week to replace those transmission poles, which feed power out of the Dos Candados substation,” said Cook.
“With a rate case, you’re always behind when it comes to rate increases. When a rate case is filed you are using a test year for financials that is a year or 2 back. In this current rate case, the 2021 test year is used which did not have the high inflation we experienced in 2022 and 2023. There will be more explanation of the rate cases at our annual March meeting.
“We’re working hard to complete more planned maintenance and less emergency repairs, so we can continue to provide safe, reliable, and affordable power to our members,” said Cook.
“That’s our mission and our promise,” Cook said.
GCEC has approximately 9,000 electric meters and 6,000 electric Member-consumers. As always, Members with questions or concerns can call or visit the Pima office and someone will be available to talk with them.