Spring is always a time in the Pataki home when my husband and I sit down at the kitchen table, take a look at our budget, and assess where we have increasing costs; where we can save money in the future; and what big expenses might be coming our way in the next year. Usually these conversations are brought on as we pull together documents and receipts for our annual taxes. Within that scope we review our monthly reoccurring costs, such as utility bills. While many essential services, such as water, gas, HOA fees, pest control, and almost every other similar monthly bill seem to be going up, I am very excited to say that the opposite has happened where our electric bill is concerned.
If you have been taking note of your PEC bills over the course of the last 3 years, you will have noticed that your electric rates continue to drop. Our family’s PEC bill in April 2014 (which is the earliest bill I could access on the PEC SmartHub) came in at $91.73. My PEC power bill last month, on the other hand, which reflected nearly the same kWh usage, was only $73.00. That’s roughly a 20% difference, and for a young family like mine, in which the parents are still building their careers and investing a lot of money into their children, that gap is huge. We only used 582 kWh of energy for our March 2017 pay period, and thus our saving don’t quite represent the large impact that a bigger energy user would see. To give members a rough estimate, if you are using 2000 kWh/month at our current combined rate ($0.08525 kWh), as many of our users in slightly larger homes regularly do, you would be saving over $40/month on your bill at our current rates compared to April 2014 rates. While we own a home that runs on both electric and gas utilities, thereby keeping our electric consumption in check in the colder months, we are also a fairly frugal family that attempts to keep our usage down no matter the time or season. We monitor our usage and try to keep it below a 1000 kWh monthly average. Despite our best efforts, however, our average consumption continues to slowly climb upwards. We have three small children, which means lots of laundry and loads of dishes running throughout the day. My husband also works from home, insuring the lights, computer, printer, and A/C or heater are going pretty continuously as well in our nearly 2,000 ft2 home. Even with our family growing in size since 2014 (welcome baby George!) and our monthly usage steadily increasing, our electric bills are falling. In an environment where the cost of living seems to always be rising, this reverse trend is very welcome.
A little less than three years ago, the PEC members elected me to serve on the Board of our cooperative. At the time, our electric rates were higher than the state average, and I committed to finding ways to make our rates more competitive with other providers in Texas. At the time our combined rate (power and power delivery) was $0.10520 kWh, which was the highest rate the PEC members had paid since 2009. The PEC Board had been steadily raising rates since Spring 2012, unable to gain traction amidst several strategic errors that cost members both money and time. As the Board began to change its makeup, beginning with my election and moving in to the next two election cycles, we turned our focus towards cost saving measures and improving our power contracts to bring rates down for the membership.
I’ve touched on ways we have been able to lower your electric bills before in prior posts, but I’ll recap a few of the high points. The first thing we did to get rates down was look inward towards improved efficiencies. We implemented a new enterprise software system that saves us nearly $5 million annually in operating costs over the cumbersome SAP system that was in place before. We also initiated a drive towards online and electronic billing to reduce postage, paper, and transaction costs. We’ve trimmed our physical presence by closing member service centers that were infrequently trafficked and didn’t provide operational service. We continue to improve and standardize processes; we’ve lowered our controllable cost per consumer by around $35, all while adding over 12,000 new meters to the system a year through the efforts of our outstanding employees. We have also worked with our primary power provider, LCRA, to improve our power prices and favorably renegotiate our longterm contract, saving $220 million over its lifetime. We additionally entered into smaller power contracts that diversified our portfolio and helped us further lower our rates.
The PEC Board has also found other ways to put money back into members’ pockets. An added benefit for PEC members is that you get capital credit distributions each year. Capital credits are essentially your shares of the company that compile over the years based on your electricity purchases. Because electric cooperatives operate at cost, our margins can be returned to our members in the form of these capital credits, which, when disbursed, show up for PEC members as credits on your December bills. Since 2014, the PEC Board has returned nearly $30,000,000 in Capital Credits to its members, which is a very healthy disbursement that surpasses what most co-ops are able to do.
Additionally, in 2015 and 2016, the Board approved Revenue Adjustment Factors (RAFs) towards the end of the year to return over collected revenue that occurred from higher than expected power sales directly to members outside of the capital credit structure. In December 2016, the Pataki family PEC bill came it at only $54.00 after an $18.31 credit that was almost equally split between our 2015 Capital Credit distribution and the 2016 RAF.
I believe that we have an obligation as board members to ensure we are getting power to you safely and reliably at the most cost-effective price possible. I think we have some more potential to lower prices over the course of the next few years, but it will take a consistent focus on cost reduction opportunities and a continued commitment to keeping inequitable subsidies out of the rates. We started getting things in line with a rate reduction in late 2014, and we’ve kept progressing downwards since then, lowering rates six more times consecutively. Today your electric bills are an average of 17% lower than they were when I joined the Board. It’s important that we continue forward with consistency, stability, and leadership that is committed to fiscal conservatism in order to achieve lower rates while maintaining the health of or our members’ infrastructure assets.