BARC ELECTRIC COOPERATIVE GENERAL INCREASE IN ELECTRIC RATES NOTIFICATION

On April 1, 2022, BARC Electric Cooperative (“BARC” or the “Cooperative”) filed an application (“Application”) with the State Corporation Commission (“Commission”) for approval of a general increase in electric rates. BARC filed this Application pursuant to §§ 56-231.33, 56-231.34, 56-236, 56-238, and 56 585.3 of the Code of Virginia (“Code”) and 5 VAC 5-20-80 A of the Rules of Practice and Procedure of the Commission.

In support of its Application, BARC states that a rate increase is needed to pay expenses, service debt, fund capital additions, retire patronage, and maintain the financial goals established by BARC’s Board of Directors. BARC requests a two phase rate increase that would generate $1.93 million in revenue over a two-year period. The Cooperative proposes to increase its jurisdictional revenue by $1.16 million in Phase 1, beginning January 1, 2023, and by an additional $0,767 million in Phase 2, beginning January 1, 2024, to achieve a $25,405,240 annual revenue requirement. BARC states that the proposed increase would result in total rate year jurisdictional margins of $1.78 million and a 2.24x jurisdictional TIER.

BARC proposes to introduce a demand charge to the distribution service portion of proposed Schedule A-U and Schedule B-U of $0.05 per kW with billing deferred until new metering technology is installed for all affected members. The estimated $55,844 demand charge revenue is included in the proposed rate year revenue, but BARC is proposing to forgo that revenue until the demand charges can be billed with the new metering technology. The Cooperative states that recovering demand costs by applying demand charges is a more cost-based method than recovering demand costs through energy consumption charges.

BARC is also seeking approval of Schedule ROW, a temporary rider to Schedule A-U, which it states is designed to pass through the portion of right-of-way cost included in base rates that will be transferred to BARC Connects in 2023. Specifically, Schedule ROW is designed to credit $767,045 to Schedule A-U customers in 2023, the first year that the proposed rates will be effective.

The Cooperative also requests approval of a new Schedule EF-Excess Facilities, which is designed for use when excess facilities are requested by members. The Cooperative states that Schedule EF includes fixed charged rates designed to recover the Cooperative’s carrying costs for excess facilities based on the type of plant installed and depending upon whether the Cooperative or the customer is the source of the initial capital for construction.

The Cooperative requests that its proposed rates and charges be approved and that the Commission authorize such rates to be put into effect for bills rendered on and after January 1, 2023, as interim rates subject to refund, if necessary, as provided in Code § 56-238. Under the Cooperative’s proposed increase, a typical residential customer using 1,000 kWh of electricity each month would experience a monthly Phase 1 bill increase of $8.22 (5.87%), from $140.01 to $148.23, and a Phase 2 bill increase of $5.77 (3.89%), from $148.23 to $154.00.<.p>

For more detailed information about the Cooperative’s proposals, interested persons are encouraged to review the Application and supporting documents for the details of these and other proposals. While the total revenue that may be approved by the Commission is limited to the amount produced by the Cooperative’s proposed rates, TAKE NOTICE that the Commission may approve revenues and adopt rates, fees, charges, tariff revisions, and terms and conditions of service that differ from those appearing in the Application and supporting documents and may apportion revenues among customer classes and/or design rates in a manner differing from that shown in the Application and supporting documents.

The Commission takes judicial notice of the ongoing public health issues related to the spread of the coronavirus, or COVID 19. In accordance therewith, all pleadings, briefs, or other documents required to be served in this matter should be submitted electronically to the extent authorized by 5 VAC 5-20-150, Copies and format, of the Commission’s Rules of Practice and Procedure (“Rules of Practice”). Confidential and Extraordinarily Sensitive information shall not be submitted electronically and should comply with 5 VAC 5-20-170, Confidential information, of the Rules of Practice. Any person seeking to hand deliver and physically file or submit any pleading or other document shall contact the Clerk’s Office Document Control Center at (804) 371-9838 to arrange the delivery.

Pursuant to 5 VAC 5-20-140, Filing and service, of the Commission’s Rules of Practice, the Commission has directed that service on parties and the Commission’s Staff in this matter shall be accomplished by electronic means. Please refer to the Commission’s Order for Notice and Hearing for further instructions concerning Confidential or Extraordinarily Sensitive Information.

The Commission entered an Order for Notice and Hearing that, among other things, permits BARC to place its proposed rates, charges, and terms and conditions of service into effect, subject to refund, for bills rendered on and after January 1, 2023.

The Commission’s Order for Notice and Hearing scheduled public hearings on BARC’s Application. On November 15, 2022, at 10 a.m., the Commission will hold a telephonic hearing, with no witness present in the Commission’s courtroom, for the sole purpose of receiving the testimony of public witnesses. On or before November 10, 2022, any person desiring to offer testimony as a public witness shall provide to the Commission (a) your name, and (b) the telephone number that you wish the Commission to call during the hearing to receive your testimony. This information may be provided to the Commission in three ways: (i) by filling out a form on the Commission’s website at scc.virginia.gov/pages/Webcasting; (ii) by email to SCCInfo@scc.virginia.gov; or (iii) by calling (804) 371-9141. This public witness hearing will be webcast at scc.virginia.gov/pages/Webcasting.

On November 16, 2022, at 10 a.m., in the Commission’s second floor courtroom located in the Tyler Building, 1300 East Main Street, Richmond, Virginia 23219, the Commission will convene a hearing to receive testimony and evidence related to the Application from the Cooperative, any respondents, and the Commission’s Staff.

An electronic copy of BARC’s Application may be obtained from BARC by submitting a written request to counsel for the Cooperative, Eric M. Page, Eckert Seamans Cherin & Mellot, LLC, 919 East Main Street, Suite 1300, epage@eckertseamans.com. Interested persons also may download unofficial copies from the Commission’s website: https://scc.virginia.gov/pages/Case- Information.

On or before November 9, 2022, any interested person may submit comments on the Application by following the instructions on the Commission’s website: scc.virginia.gov/casecomments/Submit-Public-Comments. Those unable, as a practical matter, to submit comments electronically may file such comments by U.S. mail to the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218-2118. All comments shall refer to Case No. PUR-2022-00048.

Any person or entity may participate as a respondent in this proceeding by filing, on or before July 22, 2022, a notice of participation with the Clerk of the Commission at scc.virginia.gov/clk/efiling. Those unable, as a practical matter, to file a notice of participation electronically may file such notice by U.S. mail to the Clerk of the Commission at the address listed above. Such notice of participation shall include the email addresses of such parties or their counsel. The respondent simultaneously shall serve a copy of the notice of participation on counsel to the Cooperative at the address set forth above. Pursuant to 5 VAC 5-20-80 B, Participation as a respondent, of the Commission’s Rules of Practice, any notice of participation shall set forth: (i) a precise statement of the interest of the respondent; (ii) a statement of the specific action sought to the extent then known; and (iii) the factual and legal basis for the action. Any organization, corporation, or government body participating as a respondent must be represented by counsel as required by 5 VAC 5-20-30, Counsel, of the Rules of Practice. All filings shall refer to Case No. PUR-2022-00048. Interested persons should obtain a copy of the Commission’s Order for Notice and Hearing for further details on participation as a respondent.

On or before September 2, 2022, each respondent may file with the Clerk of the Commission and serve on the Commission’s Staff, the Cooperative, and all other respondents, any testimony and exhibits by which the respondent expects to establish its case, and each witness’s testimony shall include a summary not to exceed one page. In all filings, respondents shall comply with the Commission’s Rules of Practice, including 5 VAC 5-20-140, Filing and service, and 5 VAC 5-20-240, Prepared testimony and exhibits. All filings shall refer to Case No. PUR-2022-00048.

Any documents filed in paper form with the Office of the Clerk of the Commission in this docket may use both sides of the paper. In all other respects, except as modified by the Commission’s Order for Notice and Hearing, all filings shall comply fully with the requirements of 5 VAC 5-20-150, Copies and format, of the Rules of Practice.

The Cooperative’s Application, the Commission’s Rules of Practice, the Commission’s Order for Notice and Hearing, and other documents filed in the case may be viewed on the Commission’s website at: scc.virginia.gov/pages/Case Information.

Why is BARC seeking to revise rates?

BARC must be able to fully and fairly recover the costs related to providing service to its members. This includes maintenance to ensure reliability and safety, planned and unplanned expenses such as those related to major storms, and the capital for system upgrades to meet member demand, all while maintaining adequate margins to meet the financial obligations of its lenders. Current revenues, cash flows and margins are not adequate to meet those needs in the near term while also meeting financial metrics required by the Cooperative’s lenders. Accordingly, BARC filed for a rate revision with the State Corporation Commission (SCC). This is the link to documents filed with the SCC: https://www.scc.virginia.gov/DocketSearch#caseDocs/142987.

When did BARC last receive Commission approval to increase its base rates?

BARC filed its most recent general rate application over 21 years ago, in 2000. In that case, the SCC approved BARC’s application to increase its rates effective January 1, 2001. BARC has worked to manage rate increases to members for electric service for over two decades. With rising fuel costs coupled with maintenance needs and costs to ensure continuity of affordable and reliable electric service to our consumers, the cooperative is considering all options.

Is fiber construction a reason or creating a need for the electric rate increase?

No – fiber construction is completely separate from electric service. BARC Connects fiber construction is being funded through a combination of RUS loans and grant funding. In fact, fiber construction is helping to save on some costs related to rights-of-way on the electric system since it is paying for cutting and clearing in many areas in order to make way for the fiber.

What will be the effect of the rate revision if the SCC approves the Cooperative’s application?

Pending SCC approval, the first phase of revised rates will be implemented no earlier than January 1, 2023. The second phase will be implemented on January 1, 2024. Under BARC’s proposed increase, a typical residential member using 1,000 kWh of electricity each month would experience a monthly Phase 1 bill increase of $8.22 (5.87%), from $140.01 to $148.23, and a Phase 2 bill increase of $5.77 (3.89%), from $148.23 to $154.00.

What steps did BARC take before filing?

In advance of filing for a rate case, BARC worked with an independent third-party consultant to undertake what is known as a cost-of-service study to better understand if current rate structures are appropriately recovering costs. The study outlines what changes to the current rates would be necessary to ensure costs were recovered if present rates were not adequate. This information was used to develop the new tariffs and schedules that were submitted for the rate case filing. For this rate case, BARC conducted its cost-of-service study in early 2022. The consultant then presented a recommended course of action in the form of a rate case proposal to the BARC Board of Directors. The board approved the proposed rate case in February 2022. BARC staff filed the rate case with the SCC on April 1, 2022.

Do members have a voice to express their opinions in the current rate revision? How will members continue to have a voice in future rate revisions?

The Cooperative’s Board of Directors is elected by members to represent their interests and that of the cooperative. The board works to see that BARC operates conservatively and is efficient in its operations and management, making decisions after considering the best interests of all Cooperative members. The board thoroughly reviewed all aspects of the proposal, and after careful consideration, and in accordance with the Cooperative’s principles and bylaws, the Board of Directors approved filing the rate case with the SCC. The Cooperative’s proposed residential rate is meant to fairly recover costs in a way that reflects how those costs are incurred.

What is the new demand charge that is proposed?

Using demand charges for the recovery of demand-related costs is a standard and accepted ratemaking practice. BARC’s infrastructure must always be ready to accommodate peak member demand for electricity, which occurs at those times when members use the most electricity. The larger draw of electricity “demand” is directly related to the size and cost of the electrical facilities needed to meet member needs for electric power. These demand-related costs are for facilities from the point of service to the substation to the transmission line to the generating facility, and everything in between. These facilities must always be in place for whenever our members want to use them. To better recover costs caused by peak consumption (i.e., demand), BARC is proposing adding a minimal demand charge that will have a negligible effect on members. Members will pay more, or less, in demand charges based on their highest hourly or 15 minutes of demand for electricity each month. Understanding your demand impact on the system will give you greater control of when you choose to make greater use of the electric system resources provided by BARC. In the past, the costs for demand have been recovered entirely in the price of electricity consumption (per kilowatt hour). As technology has improved, it has become a less efficient approach to recovering demand-related costs. Demand charges are a more appropriate way to directly recover demand-related distribution costs.

Will BARC implement the proposed demand charge right away?

No. The Cooperative is deferring implementation of the proposed demand charge until BARC replaces its currently installed meters with meters capable of registering demand for all customers on an hourly or 15-minute interval basis. Once these new meters are deployed, they will allow BARC to practically and efficiently bill residential members based on the time that the electricity is used. By doing so, members will be able to better control both costs (consumption and demand), whereas before they can only control consumption. BARC will educate its members on the proposed demand charge before installing new meters, providing instructions on how members can more effectively control their costs.

How is this rate case different from other rate changes we have seen in the past several years?

Over the course of the past several years, BARC has passed through small increases to electric consumers to cover wholesale power distribution costs. BARC purchases its power from Old Dominion Electric Cooperative (ODEC) the power generation cooperative that BARC owns, along with 10 other cooperatives in DE, MD, and VA. As fuel prices increase, ODEC must increase its pricing to its member cooperatives to offset those costs.

Due to natural gas prices having roughly doubled since the beginning of the year, ODEC passed through a rate increase effective May 1st that was passed along to electric consumers. BARC realizes that the cost of all goods and services like gas and groceries are on the rise. The same is true for energy prices also. As volatile pricing continues taking place, it is likely additional wholesale power distribution cost increases will occur.