SMECO Distribution Rate Hike Is Approved

by | Mar 10, 2016

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Southern Maryland Electric Cooperative’s (SMECO’s) new Distribution Service rates were approved on March 2 (Case No. 9396) by the Maryland Public Service Commission (PSC).

SMECO is a customer-owned electric cooperative providing electricity to more than 160,000 ratepayers in southern Prince George’s County, Charles County, St. Mary’s County, and all but the northeast portion of Calvert County.


Distribution Service rates reflect the investment SMECO makes in substations, poles, transformers, power lines, hardware and software, people, and buildings. The Distribution Service rates approved by the PSC represent an increase of about $7.36 on an average residential customer’s monthly bill. The utility claims that the rate hike “is more than offset” by the decrease in SMECO’s Standard Offer Service (SOS) energy charges that customers have enjoyed over the past couple of years.


“Because energy charges have decreased over that time period, the average residential bill in 2015 was $25 to $30 less than the average bill in 2014.” the cooperative said.


SMECO’s residential Facilities Charge, which has not changed in 21 years, will increase by 90 cents, from $8.60 per month to $9.50 per month.


“For every improvement we make to our electric infrastructure or technology systems, for every line we replace or substation we upgrade, for every building, every line truck, every new line to every new neighborhood, there is a cost,” commented SMECO CEO Austin Slater, Jr., adding “Those costs are reflected on our customer-members’ bills and they are an investment in the electric system that brings power to every home in Southern Maryland every day.”

Slater explained, “Our rates reflect the price we pay to provide a high level of electric service reliability. In the past six years, SMECO has invested more than $377 million in infrastructure, including the Southern Maryland Reliability Project, which was completed in November 2014 at a cost of $108 million. Our goal is to maintain the highest standard of reliable service for our customer-members.”


The main component of the bill, the SOS energy charge, together with the Power Cost Adjustment, covers the cost of power. That portion of the customer bill has decreased over the past few years, hitting a 10-year low in June 2015, SMECO claims.


The utility said it makes no profit on Standard Offer Service. The wholesale price that SMECO pays for power is passed on to customers without any mark-up. SMECO’s new Distribution Service rates will not affect the SOS costs for energy, which make up about 60 percent of the average residential customer bill.


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