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At Northern Neck Electric Cooperative, we understand that every dollar counts for your family. Since our last rate filing back in 2020, the world around us has changed significantly. But, we have remained steadfast in our commitment to providing you with safe, reliable and affordable power.
Distribution charges, which cover the cost of building, repairing and maintaining the NNEC system, account for about 30% of your monthly bill. These costs include poles, wires, transformers, and substation, vehicle and right-of-way maintenance. For example, a member bill of $300 includes only about $90 in distribution charges from NNEC. The remaining charges are directly related to purchased power and are pass-through costs.
We have worked tirelessly over the past six years to absorb rising costs and operational pressures without increasing rates. This reflects careful planning and diligent management. However, to continue delivering the standard of service you expect — and to make the necessary investments in the safety and reliability of our system — we must now implement a change to our rates.
As your energy partner, we stretch every dollar spent while absorbing rising costs whenever possible. Our team is highly efficient and dedicated to extending the lifespan of our tools, equipment and vehicles, ensuring the reliable service you expect.
A rate increase is never desirable and is always our last resort. We understand that it will be difficult for some of our members. Our team will continue by providing education and advice to help members reduce energy use.
In addition to these challenges, NNEC has faced ongoing cost pressures on materials and equipment essential to maintaining and improving our system. Supply chain disruptions have resulted in longer lead times and higher costs for critical components, requiring us to plan even further ahead with limited resources.
Expenses related to required distribution equipment, such as wire, transformers, conduits, poles and vehicles, continue to rise due to inflation and supply chain issues. In some cases, equipment prices have more than doubled.
For example, the cost of a 25-kVA transformer in 2019 was about $680. Today, that same piece of equipment is nearly $1,500. The cost of 1,000 feet of steel-reinforced aluminum conductor used on our system jumped from $231 to $460 over the same timeframe. And the price of the underground wire used to connect to your home rose from $2,339 to $4,266 for 1,000 feet.
I feel it’s important to reiterate that NNEC’s system serves a higher percentage of residential members — nearly 90% — than most electric cooperatives in the U.S. Without the benefit of large commercial accounts, our families and neighbors are more directly affected by these increases in the cost of doing business.
The requested rate revisions will generate additional revenue, allowing NNEC to recover the costs of these investments, continue to meet its financial obligations, and provide the high levels of reliability and customer service expected by members. Visit page 16 of the August Cooperative Living issue for the official notice regarding NNEC’s request to revise rates.
Thank you for your understanding and support as we navigate these challenges together. We remain committed to serving you with safe, reliable and affordable power.