Dear Members,

In the November 2023 AWARE column, I wrote about some challenges your cooperative is facing due to the increased cost of materials for power line construction and maintenance. In this month’s column, I want to provide you additional details of these cost increases and the steps taken to address these impacts.

As I noted in November, even with the recent relief in inflation in different sectors of the economy, higher costs still remain for power line components. Our hopes were that the increased costs would subside over time. But as of the date of this writing, that has not happened for a number of critical components we use in our operations, and it appears these higher costs have become permanently embedded.

I just reviewed a material supplier’s notice of additional price increases for 2024. To date, we have absorbed these cost increases impacting multiple facets of our operations and have not passed them on to the members.

First, let me review how the electric cooperatives work together to contain the costs of our power line materials and equipment. Power line materials are expensive to start with. To contain the high voltages within our transmission and distribution systems and to supply the appropriate voltages needed to serve members, there are very tight tolerances for construction and safety standards. Cooperation among cooperatives is one of the cornerstones of Randolph EMC. We collaborate for our power supply and generation resources, training and safety programs, political engagement and—relevant to this article—our power line materials purchasing. Combining common needs and resources with other cooperatives allows economies of scale and a collective voice on issues that affect the operations and members of each individual cooperative. We’re stronger together.

Formed by North Carolina’s electric cooperatives in 1976, Tarheel Electric Membership Association (TEMA) based in Raleigh, supplies materials for electric cooperatives in North Carolina. In the last few years, TEMA has expanded to supply cooperatives in Virginia and Maryland as well. TEMA's ability to purchase in bulk brings value and efficiencies for our material purchases and deliveries.

As a member-owned cooperative, Randolph EMC operates on a not-for-profit basis. Providing safe, reliable and affordable electricity with exceptional service is what we strive for every day. There is no other reason for Randolph EMC to exist. When it comes to your electric bill, our rates are set simply to cover the cost of doing business, not to generate a profit for outside investors.

It's your Board of Directors and management team’s responsibility to operate your cooperative as efficiently as possible. Here’s an example of how we take this responsibility seriously.

• When I became your CEO in 2000, we had 88 full-time employees.
• Currently, our core full-time workforce is made up of 82 team members.
• We operate now with 7% fewer employees even though the membership has grown by over 16% since 2000.

The rising costs graphic tells the story of the cost impact of some standard materials we use every day for power line construction and the actual cost increases we have experienced since early 2020. In my 39-year career at Randolph EMC, I do not recall such dramatic, across-the-board increases in the cost of these materials in such a short period of time.

Grid Access Charge Adjustment

To address this cost impact, staff recommended and after much discussion your Board of Directors approved, an adjustment to the Grid Access Charge on each member’s power bill.

The Grid Access Charge is a component included in every electric utility’s rate schedule. Many other utilities and providers—such as your home phone, cell phone, cable, internet or satellite TV—include some sort of monthly charge to cover the cost of providing the base service.

Randolph EMC’s Grid Access Charge, in the past referred to as the Basic Facilities Charge, is designed to cover the cost of our power delivery system. This includes transmission lines, substations, distribution lines, power poles, transformers and conductors. It includes all physical structures that allow you to access the electrical grid and bring electric energy into your homes and businesses.

The charge is also designed to cover any required maintenance on the system and the cost of restoring power when the lights go out. Our goal is to have the most reliable electric system possible. When you flip on a switch or plug in an appliance, we want the power to be available for you as reliably as possible. Randolph EMC has historically maintained a very reliable system, and it takes a concerted effort to ensure this occurs.

There are 8,760 hours in a year. For the calendar year 2023, Randolph EMC kept the power flowing across the system 99.98% of the time. This translates to the members being out of power on average only 1 hour and 45 minutes for the entire year. Even though this is a small number, our goal is to continue reducing member’s outage time and this initiative is an important part of our 2024 strategic planning efforts.

The Grid Access Charge for our standard residential rate is currently $30 per month. In our most recent cost analysis, an independent party showed that the average actual grid access cost for Randolph EMC’s non-commercial/residential accounts is $61.20 per month. This is significantly higher than the rate we charge.

It is my job to keep you fully informed about the operations of your electric utility. As I have said many times over the last 23-plus years as your CEO, I will always be straight with you. It’s my job to tell you like it is, good or bad.

As a standard practice, electric utilities do not recoup the full cost through the Grid Access Charge alone. Rather, it’s also collected through the energy portion of the bill. This is true for Randolph EMC as well. Our goal is to strike a balance on what the rate should be so that it is fair for all members.

Therefore, after much consideration, the Grid Access Charge will be increased to $35 per month for non-commercial/residential accounts, effective on all billing after April 1, 2024. This adjustment will more closely reflect the actual cost of providing electric service and will assist with the increased material costs we are experiencing. Other metered rate schedules will also be adjusted in a similar manner.

I have used this example in the past and cannot think of a better analogy than an actual REMC bill comparison. I’m an REMC member, too, and have been my whole adult life. I’ve lived on the REMC system since infancy. Here is my personal example to illustrate why making this adjustment helps to ensure fairness for everyone.

I have two accounts with Randolph EMC: one for my home and one for an old shop we use for storage. The shop is rarely used and has very low kilowatt-hour (kWh) usage. For the previous 12 months, I have averaged 1,859 kWh per month at my home, but I pay the same Grid Access Charge for both accounts. This is currently $30, even though the “real cost” for each is $61.20.

As you can see because of the kWh usage, my home account clearly subsidizes the shop account. The shop account does not use enough energy to pay its “fair share” to deliver the electricity when I need it to flip a light on. The higher kWh usage at my home and thousands of other members' homes makes up for it.

It is my job to keep you fully informed about the operations of your electric utility. As I have said many times over the last 23-plus years as your CEO, I will always be straight with you. It’s my job to tell you like it is, good or bad.

Your Board of Directors and employee team will continue working hard to mitigate costs by operating efficiently and effectively because we know any increase has an impact on your family’s budget.

Cooperatively Yours,

Dale F. Lambert, Chief Executive Officer