A pair of incremental electricity rate increases is set to take effect beginning next month for residents and businesses supplied by Cullman Electric Cooperative.
Announced Sept. 14 at the cooperative’s 2024 annual meeting, the two-part increase will bump the average residential power bill by $5-$6 per month in each of its stepped implementations, according to a release the member-owned utility shared Monday. The first increase will take effect Oct. 1, while the second — which will once more increase average monthly residential bills by $5-$6 — will take effect in April of 2025.
Citing surging infrastructure demands across its regional service area, the Tennessee Valley Authority in August announced that it would be increasing the cost of electricity. That increase is expected to raise the average residential electricity bill by $3 to $4 per month, though CEC noted in a release that the additional revenue “is given to TVA and does not impact Cullman Electric’s bottom line.”
Cullman Electric Cooperative is a distributor of TVA-supplied power. Remarking on the cooperative’s “difficult decision” to raise rates, CEC board chairman Robert Tidwell said in a statement that Cullman Electric has attempted to minimize the effects of previous recent TVA cost increases for members.
“These changes are essential for Cullman Electric Cooperative to continue providing the level of service our members deserve and expect,” Tidwell said. “The primary responsibility of a cooperative is to look out for the best interests of all its members. This is a difficult decision, but one we know is necessary. We have all felt the impact of rising prices over the past several years. The co-op’s management team and employees have worked extremely hard to control expenses, trim budgets and find more efficient ways to serve our members.
“Cullman Electric had one rate increase in the past six years. During that same time, the price has doubled and, in some cases, tripled for many of the supplies and equipment necessary to deliver safe and reliable electricity to all our members. We understand that many people are struggling and these changes will be implemented in a way that lessens the immediate impact on our members.”
Not all of the cooperative’s rate increase reflects a metered increase in the cost of power.
“Starting in October, the energy charge for residential consumers will go up 1 percent — an increase of approximately $1 to $2 per month on an average residential consumer’s bill,” the utility said in its release. “Residential accounts with a standard 200-amp meter will have a $4 increase in the monthly customer charge. For the small percentage of members with a larger home that requires a 400-amp or greater service, the monthly customer charge will increase by $5.”
Appearing on utility bills as a fixed fee, the customer charge is a monthly charge that covers the associated infrastructural costs — including poles, wire and transformers — of providing electricity to CEC members. By contrast, the energy charge, “also known as the kilowatt hour rate, is a variable fee that differs monthly for each consumer based on the amount of electricity used,” CEC explained.
Cullman Electric Cooperative CEO Tim Culpepper said in the statement that a combination of surging growth and recent general cost increases — which have inflated the average cost of “essential materials and equipment” by 143 percent — compelled the utility’s decision to raise rates for members.
“Our service area is experiencing growth on a scale we have never seen before,” Culpepper said. “It really exploded six years ago and has not slowed down. During that same time, inflation has driven up the price of materials and equipment like transformers, meters, poles and wire. Meeting the energy needs of our growing community brings with it the additional expense to build and maintain the necessary infrastructure. and the costs associated with operating and maintaining a safe, reliable electric distribution system have also increased.”
Since 2018, Cullman Electric Cooperative has grown by more than 5,000 new member accounts, representing “a 10-percent increase in total consumer accounts,” according to the CEC. “The operations department has seen work orders for new construction and maintenance increase from 5,700 annually to more than 9,000 work orders completed last year.”