Electric cooperatives were founded to provide safe and reliable electricity at the lowest possible cost and we are excited to be able to lower rates for everyone at a time when the cost of everything else seems to be going up.
The rate component that Iowa Lakes Electric Cooperative pays for its energy purchases from our wholesale power suppliers will decrease by $0.00109/kWh in 2020. As in the past, when your Cooperative receives additional charges or credits in wholesale power costs, these increases and decreases are correspondingly passed through to our member-owners. And this decrease in wholesale power costs will result in a rate decrease for all of our 12,860 member-owner accounts in 2020.
On your monthly billing statement there is a line item that reads "Energy Power Cost Adj". In 2020, the negative $0.00109 energy power cost adjustment will result in a credit being applied to all kilowatt-hours that were used during that month. For the average residential account using 1,765 kilowatt-hours of electricity, this rate decrease will save the household approximately $2 per month, or $24 year. This will result in an overall rate reduction of approximately $690,000 to all member-owners in 2020.
As you may remember, Iowa Lakes Electric Cooperative adjusted its base rate to its member-owners effective January 1 of 2018. The new rates were based on a cost of service study designed to equitably collect revenues from members based upon their service characteristics and cost drivers. At that time, the power cost adjustment component of our rates was reset to zero.
ELECTRIC HEATING DISCOUNTS
Many member-owners take advantage of your Cooperative's electric heating program and receive a discount for the electricity used to heat their home, shop or business during the months of October through April. With the decrease in the energy component of our wholesale power costs, there is also a corresponding decrease in the electric heat credit. In 2020, the heat credit will decrease from 3.716-cent to a 3.610-cent per kilowatt-hour discount for electric heat, resulting in no change in the electric heat rate.
While your Cooperative is able to lower rates right now, there is no guarantee rates will not have to be changed in the future. There energy markets are constantly fluctuating and changes in the weather, natural gas supplies and government regulations could all result in rate changes down the road.
Your Iowa Lakes Electric Cooperative board and employee team continue to work diligently to help hold the line on rate increases. Your Cooperative staff and your board are doing everything possible to provide great value to all members.