Customers Will Pay About 4.2% More for Electricity if SMECO Wins Rate Increase Approval

Utility Says Customers Can Expect an Increase of About 4.2 Percent on a Residential Customer's Overall Bill

Southern Maryland Electric Cooperative, Inc. (SMECO) announced that they are filing a request with the Maryland Public Service Commission (PSC) to adjust its Distribution Service rates. According to SMECO, this would be the first change of the Customer Charge or the Distribution Charge on its customers' monthly electric bills since 1994.

Customer bills have two main components, the Standard Offer Service (SOS) and the Distribution Service. The SOS Energy Charge and Power Cost Adjustment together cover the cost of energy. SMECO makes no profit on Standard Offer Service; the cost of energy is simply a pass-through cost. The wholesale price that SMECO pays for energy is passed on to customers without any mark-up. The SOS portion of the customer bill has changed over the past couple of years as energy costs nationwide have increased. SMECO's proposal does not affect the SOS portion of the customer bill.

The costs SMECO incurs for power lines, utility poles, transformers, substations, buildings, vehicles, employees, and the cost of rebuilding after a hurricane or a tornado are covered by the Distribution Service portion of customers' monthly bills. SMECO proposes a change that will result in a increase of about 4.2 percent on a residential customer's overall bill. A typical customer using 1,200 kWh per month will have an increase of about $6.10 on average. SMECO's rate filing proposes a Customer Charge of $12.90 per month and a Distribution Charge of $.0259 (2.59 cents) per kilowatt-hour.

Over the past 13 years, SMECO's full-time workforce has remained stable, increasing from 454 to just 459. According to A. Joseph Slater, SMECO President and CEO, "Although we have consolidated and streamlined services to maintain cost-effectiveness, the co-op requires this modest rate increase to provide the level of reliability customers expect and to maintain SMECO's financial integrity." According to a filing SMECO made with the PSC, Slater was paid an annual salary of $253,931 in 2005.

Since 1994, SMECO's membership has grown from 102,600 to 142,000. As the population in Southern Maryland has increased, the co-op's investment in construction has increased each year from $22 million in 1994 to $49 million in 2006. "Our construction plans for the next 20 years include substations and transmission lines to meet our customers' requirements for energy and reliability," Slater added in a released statement. "In addition to keeping up with the growth in Southern Maryland, SMECO has introduced new customer services, such as online bill payment. We are using new technologies, such as automated meters that download monthly usage information. We're keeping pace with our customers' demands."

SMECO is a customer-owned electric cooperative providing electricity to over 142,000 services in southern Prince George's County, and in Charles County, St. Mary's County, and all but the northeast portion of Calvert County. Co-ops are distinctly different from investor-owned utilities because co-ops are owned by their customers, and these members vote for men and women who sit on the Board of Directors.

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