Midwest Energy is considering adoption of a three-part rate structure for residential and small business (General Service Small) electric rate classes, featuring a customer charge, energy charge and a demand charge, beginning Jan. 1, 2023. The proposed rate changes would be revenue-neutral for the cooperative, and would be phased in over a period of four years. As demand charges are introduced, energy charges will decline each year, offsetting much (in some cases, all) of the demand charge, resulting in a no overall increase for an average residential customer.
Currently, most Midwest Energy residential and small business customers have a two-part rate structure; a customer charge, which is a fixed $28 per month charge for all residential customers, and an energy charge, which is based on the volume of kilowatt hours of electricity used during the month.
The proposed rate change would introduce a third component, a demand charge. Demand refers to the amount of electrical power being used at a given time. While the energy charge is based on the volume of electricity used in kilowatt hours (kWh), demand is based on the intensity at which energy is used (or the “demand” one puts on the grid) in kilowatts (kW).
Demand charges would be a monthly charge based on “peak demand,” or the maximum number of kilowatts a customer used during a 15-minute period. In the summer months of June 1 through September 30, demand would be billed based on peak demand between 3 p.m. to 7 p.m. The rest of the year, the billed demand would be based on whenever peak demand was reached during the month. Non-summer demand charges would be lower than during the four summer months.
Under the proposal, residential customers would begin seeing demand measurements on bills beginning Jan. 1, 2023, but there would be a $0 charge for each kW of demand. Small businesses (General Service Small) would begin seeing demand charges on bills, and would be billed at the rates in the chart below beginning Jan. 1, 2023. For residential and small business customers, as demand charges increase during the multi-year phase-in, energy charges will decrease. The $28 per month customer charge for residential, and the $35 monthly customer charge for small businesses, would not change.
Currently, roughly 80 percent of Midwest Energy’s costs are fixed, mostly related to system capacity, but only 20% of revenue is recovered through fixed charges. Three-part rates would help bring those two numbers closer to alignment. Customers will then have two ways to manage bills: Limit total kilowatt hours used in the month or limit maximum electric use at any one time.
Midwest Energy has historically divided electric customers between "M" and "W" systems for many years. The M system is the legacy Midwest Energy system, while the W system was purchased from Westar Energy in 2003. As a condition of that sale, rates for W system customers were to be gradually combined with Midwest Energy’s M system rate schedules. Many differences were eliminated in a 2018 rate case. This rate case continues that consolidation, with company-wide residential, small business, and oil service classes after three years. Irrigation rates would remain different for M and W system customers in this rate change proposal, though differences between the two would be greatly reduced.
*Note: Bill impact graphs assume no changes in customer's energy usage and an average demand in kW for that class. Your actual demand could be higher or lower and will be affected by changes in energy use patterns.
Q: Why is this rate change necessary?
A: The primary objective of this rate action is to modify rate designs for residential and small business customers. A secondary objective is to continue consolidation of rate schedules begun in previous rate changes. No company-wide change in revenue collection will be made. Midwest Energy customarily reviews its rates every three years, with some combination of rate case goals.
Q: Why introduce demand charges for residential and small commercial customers?
A: Demand charges are a more accurate and transparent way to bill customers according to the impact each customer places on the grid and generating resources. By sending a price signal to reflect actual costs, customers can influence individual bills immediately and overall capacity costs in the long run.
Q: What’s the purpose of the demand charge?
A: The demand charge recovers fixed costs (transformers, power lines, generating resources, etc.) based on the intensity at which energy is used. A demand charge line item will appear on residential customer bills starting with a $0 charge in Jan. 2023, and the charge will gradually increase over four years while the energy charge decreases.
Q: How does Midwest Energy determine charges?
A: An independent cost-of-service study was performed this year to allocate costs across all rate classes. A cost-of-service study identifies the cost of providing service to each rate class as a function of load and service characteristics. These studies provide a useful guideline for assigning cost responsibility in a way that is fair and equitable.
Q: How can I see what my demand is before my bill arrives?
A: Midwest Energy customers can access Customer Connect, an online portal that provides secure access to detailed electric usage viewable in monthly, weekly, daily or even 15-minute increments. To access Customer Connect, visit www.mwenergy.com and click the "login" button to access your Midwest Energy account. Once logged in, click the Customer Connect logo, which takes you to your usage dashboard. This video offers a short explanation of how to view your demand in Customer Connect.
Q: How much will my bill change?
A: Bill impact examples for Residential, Small Business (General Service Small) and Irrigation customers are above. For more information, including bill impacts to other rate classes, please call Ryan Hammerschmidt at 1-800-222-3121.
Q: How do I know if my account is in the "M" or "W" system?
A: The map below shows the boundaries of the M and W system. If you still have questions, please call Ryan Hammerschmidt at 1-800-222-3121.
Q: Who determines when a rate changes?
A: Midwest Energy’s Board of Directors and executive staff continuously monitor the financial position of the cooperative and industry trends across the country to determine if or when a rate increase or rate design change is necessary. An independent, experienced firm was hired to conduct a cost-of-service study, and recommend changes to rate designs.
Q: What is the effective date of the new rates, and when would I see them on my bill?
A: If approved by the Board of Directors, the revised rates would take effect January 1, 2023. However, residential customers would not be billed for a demand line item until January 1, 2024. This is to allow time for customers to better understand demand, and for Midwest Energy to conduct an information campaign informing customers how they can lower demand to control costs.
Q: How can I find out how the proposed rate changes will affect my bill?
A: If you'd like details on how this rate change would impact your bill, please call us at 1-800-222-3121 and speak with Ryan Hammerschmidt. He will walk you through the changes as they relate to your account.
Q: How can I manage demand?
A: Spreading out the use of major appliances is the easiest way to manage your demand and control your electric bill.
Q: How can I learn more, or make my concerns known to the Board of Directors?
A: First, you can send e-mail comments to Bob Muirhead, Vice President of Customer Service. Alternately, you may call Mr. Muirhead at 785-650-2502, or mail your comments to his attention at 1330 Canterbury Dr., Hays, KS 67601 no later than Nov. 10, 2022.
Next, you can attend one of four public information meetings being scheduled as follows:
Colby: October 11, 6:30 p.m., Colby Community College, Student Union
Kinsley: October 18, 6:30 p.m., City Hall, Community Room
Great Bend: October 19, 6:30 p.m., Great Bend Front Door, 1615 Tenth St.
Hays: October 20, 6:30 p.m., Hilton Garden Inn, 221 W 43rd St.
Lastly, you can attend the open Board meeting where the proposed changes will be discussed and voted on November 17 at 1 pm at Midwest Energy headquarters, 1330 Canterbury Dr. in Hays.
* This page last updated 9/29/22.