Starting in 2009, Carbon Power & Light made changes to their general service seasonal accounts in both criteria and charges.

The changes affected who was considered a general service seasonal account and raised their facility charge from 24 dollars to 30 dollars. CP&L made the decision following a cost of service study done by independent consultant C.H. Guernsey in 2008.

In assessing what changes needed to be made to remain cost-effective, the consultant used several years of data and took out “abnormal” occurrences that could skew the statistics, such as a bad winter storm. From this information, the consultant came up with how much each type of account costs to run in a “normal” year.

CP&L’s last cost of service study was in 2001. The studies are conducted when the ratio between costs and sales diminishes noticeably.

From there, CP&L was able to adjust the rates so each type of account was paying for what they used in both electricity and infrastructure. To do that, the company came up with a formula for seasonal accounts.

The new seasonal formula affects about 1,500 of the company’s 6,149 accounts and incorporates both seasonal and low usage accounts. Low usage accounts are those that use fewer than 1,000 kilowatt-hours per year. For perspective, general service accounts averaged 1,356 KWh in December alone.

To determine whether an account should be considered seasonal, CP&L first takes the average kilowatt-hours per month over the course of the year and takes 40 percent of that number.

“We took the cost of service study and what they determined we needed to make,” Chuck Larsen, CP&L manager, said about arriving at 40 percent. “And we backed into it, with a formula that would get us there.”

Next, CP&L looks at the seven months that used the fewest kilowatt-hours and averages those together to find their second number. If the first figure is greater than this number, the account is seasonal. In other words, if 40 percent of the monthly average is greater than the average of the lowest seven months, it is considered a seasonal account.

The formula errs on the side of not counting someone as a seasonal customer.

According to the cost of service study, costs were outstripping sales and in order for CP&L to continue to “provide the services they (the customers) want, the way they want them,” as Larsen said, they had to raise either their kilowatt-hour sales or their facility charge. CP&L opts for a blend of the two to make their rates as fair as possible for everybody.

CP&L doesn’t use just kilowatt-hour sales because 25 percent of their customers are seasonal accounts which only use 3.4 percent of CP&L’s electricity. Nonetheless, CP&L must provide the same services to bring power to that 3.4 percent – from hardware and maintenance to the day-to-day costs of running a business – as they do everybody else.

The six dollar facility charge increase ensures that customers with seasonal accounts are paying their fair share of those costs.

CP&L’s other option would be to use only a facility charge, but then it would be unfair to those that use less electricity as they would pay for others who used more than their fair share of power.

As a cooperative, Carbon Power & Light is owned by the community, so it is in the company’s best interest to make sure everyone pays what they should. Through the facility charge, customers who use too little electricity to compensate for the services CP&L provides – expenses like equipment repairs, pole inspections and system upgrades – contribute as much as community members who pay through high energy usage.

Another advantage of a cooperative to the community is that, as a non-profit, in years where the company brings in additional revenue, that money goes back to the customers. This last winter was an especially cold one, so those who were CP&L members in 2009 will receive capital credits this year.

Checks will be available at the annual June meeting, held on the last Saturday of the month.