(Dec. 15, 2016) — The LCEC mission is very simple: To provide reliable power and quality service at the lowest possible rate. The history of LCEC rates include the fact that they are designed to cover the cost of doing business. Included in those costs are power supply (69 percent), depreciation and taxes (10 percent), net margins returned to members (9 percent), operation and maintenance of the electric system (8 percent), and interest on loans (4 percent).
For more than 75 years, LCEC Board members (who are also customers) and employees have done all that they can do to uphold the mission. Keeping the system in good shape, meeting customer needs, and maintaining rates has always been the plan.
Base Rates Remained the Same
From 1983 to 2006, base rates remained the same for LCEC customers. After 23 years without a base rate increase, LCEC restructured rates and the average residential customer using 1,200 kWh was paying $1.80 more a month for electricity.
This was the result of an aging infrastructure and unprecedented growth requiring more than $174 million in system upgrades and expansions during a four-year time period.
In addition, rising fuel costs added to the equation. Rates remained unchanged until the end of 2008 when the national economy took a dive, customer growth plateaued, and eventually declined drastically as a result of home foreclosures and business closings. The need to invest in the electric system paired with reduced revenues lead to another slight rate increase in 2009.
The good news is that over the following three years, employees worked hard to absorb the higher costs of doing business by developing efficiencies and utilizing technology.
Rates were reduced in 2014 and twice in 2015. Again, rates were reduced twice this year and are lower than they were in 2006 and are among the lowest in Florida. Also during this time, LCEC has been able to return more than $242 million in equity to active and inactive members. Investor-owned, and government-operated utilities do not return equity to customers.
Some Utilities Earn Profits — Not LCEC
Investor-owned utilities are in business to earn a profit and turn profits over to their shareholders. LCEC electric rates are lower than any investor-owned utility in Florida with the exception of FPL. We are always working hard to close the gap while still providing reliable power and quality service.
Government-operated utilities put profits back into the general fund to be used for other projects at the will of staff or elected officials. LCEC electric rates are lower than most of the 34 municipal electric utilities in Florida.
History of LCEC is to Serve Members
Cooperatives are not-for-profit and in business only to serve members. Members invest in the business through rates. It is a balancing act to set the rates at a level where the system is reliable, a portion of margins can be returned, and all other expenses are covered. LCEC electric rates are lower than most of the 15 electric distribution cooperatives in Florida.
Keeping costs low, while also meeting the needs of customers is a balancing act that every business must master to survive. LCEC remains focused on not only keeping the lights on, but also on improving reliability each year while maintaining a history of LCEC competitive electric rates. That has been our mission since 1940.