The rules and regulations of service for Victory Electric are part of the electric service agreement between the cooperative and the member and govern the supply and use of electric service. The service rules and regulations are intended to establish fair and equitable policies and procedures to enable the cooperative to provide safe, efficient and uniform service to all members. They also ensure Victory Electric’s members the greatest satisfaction with electric service possible, consistent with sound utility practices and safety. (Rules and Regulations)
Victory Electric bylaws
Victory Electric operates under certain rules referred to as bylaws. Bylaws are defined as the rules for governing an organization, such as an electric cooperative, approved by the membership. You can download a copy of Victory Electric’s bylaws here (Bylaws updated 9-2020).
Since 1945, we’ve taken pride in delivering safe and reliable electric service to southwest Kansas. But our commitment doesn’t stop there. We purchase power for our members from diverse, competitive sources to ensure the best possible rates. All Victory Electric rates are designed with the cooperative and its members in mind: fair, equitable and not for profit, based on the costs of maintaining our system and safely delivering your power.
Electricity rates are determined by tariffs. A tariff is defined as a statement of a utilities rates, terms, and conditions of service. A detailed description of our rates can be found in our tariffs (updated 06-2020).
The revenue derived from the rates paid by the members for electric service funds the operation of the electric cooperative. It is the responsibility of the board of trustees and management to examine rates periodically to be sure that they are just and reasonable and will allow the cooperative to fulfill its obligations to the members and the cooperative’s lenders.
This is done through a Cost of Service Study (COSS), or sometimes called a rate study, performed by an outside, independent rate consulting company. The COSS is an important tool used in setting utility rates. The COSS fairly and equitably breaks down the costs of providing service to each rate class. Each rate class has unique load and service characteristics that impact the costs for that class. The COSS findings offer useful guidelines to assist the board in responsibly allocating costs to each class of members in a way that avoids any class paying more than their fair share.
Rate studies are complicated. In a sense, they are an attempt to predict the future, or at least the answers to a few questions. What revenue will be required to fund the operation of the cooperative for the foreseeable future, and what is the fairest way to collect that revenue through rates? What external factors will affect the cooperatives financial picture? What will the weather be like in the coming years?
While we may never accurately predict the weather in the future, an attempt can be made to predict the other variables that affect rates. The study has several stages. First, we will use existing data to determine what revenue is required to operate the cooperative in the future. Next, the cost of service study is conducted to assign the costs to provide electric service to member classes using traditional ratemaking principles. Finally, the consultant designs new rates that meet the cost recovery obligations, cover the revenue fairly from each member class, and meet any other strategy or goals identified by the board in the rate study process.
Careful oversight is maintained at every step in the rate change process. The consulting firm is instructed by the board and management to develop their study using standard methods developed by regulatory authorities across the country and the same methods used by the Kansas Corporation Commission (KCC) when Victory Electric was still regulated.
Victory Electric’s board of trustees is responsible for setting the cooperative’s electric rates, and when the rate study is completed, it is reviewed in detail by trustees. The board takes its responsibility to set fair rates very seriously. After all, they are members of the cooperative and pay the same rates. They are elected by you and other members each year. Trustees want to ensure electric rates are adequate to maintain a solid financial condition, provide the necessary revenue for delivery of reliable electric service, and avoid the subsidization between rate classes. Victory Electric sells power to its members at cost, not-for-profit. We certainly want to avoid rate increases, but we also need to ensure the long-term financial health of the cooperative.
The board of trustees and employees of Victory Electric work every day to achieve operating efficiencies to help keep costs low. As your local, not-for-profit electric cooperative, our primary goal is to minimize the effects of any rate change while maximizing service in a cost-effective, reliable manner you can count on.
The common misconception is that Victory Electric changes rates each month or whenever we want. This is false. In fact, we are required to give all members notice of any rate increase and hold a public meeting where members can ask questions and make comments. Please note: The Energy Cost Adjustment (ECA) fluctuates each month and is a direct pass through from our power supplier and can change each month based on the cost of fuel for generation.
Commercial and industrial members are billed on both demand units and energy units. Demand is billed in kilowatts (kW) and measures the rate at which energy is used. Energy is billed in kilowatt-hours (kWh) and measures the amount of energy consumed. Commercial and industrial members use 10-60 times as many kW as residential consumers, and some need large amounts of electricity once in a while, while others, almost constantly. Electricity can’t be stored, so meeting these members’ needs requires keeping a vast array of expensive equipment like transformers, lines, substations, and generating stations, on constant standby. These factors create a need to charge for demand units.
Electric demand refers to the maximum amount of electrical power a members consumes at a given time, as opposed to energy which is the amount of power used over a period of time.
For example, a typical hand iron requires, or demands, 1,000 watts or 1 kilowatt (1 kW) of power. If that iron is used for one hour it consumes 1,000 watt-hours or 1 kilowatt-hour (1 kWh) of energy.
Using multiple appliances at the same time increases your demand.
A typical dishwasher has a demand of 1,200 watts. If you used the dishwasher at the same time as the hand iron, the total demand for these two appliances would be 1,000 watts plus 1,200 watts or 2,200 watts. If operated at separate times, the maximum demand for these two appliances would be 1,200 watts.
Demand charges cover the fixed costs incurred by the cooperative to provide a given level of service as well as build and maintain a system of the correct capacity to serve the facility. The costs for demand pay for the cooperative to have lines of appropriate size, a transformer that can meet peak requirements, and services (equipment, supplies and personnel) that can meet all of the needs. The demand charge is calculated on the basis of the highest demand over a short period of time (15, 30 or 60 minutes) during the billing period. This amount covers the cooperative's cost of capacity so it can meet demand for power at any time during the entire billing period.
A demand (kW) charge for commercial and industrial members is based on the highest amount of power needed to run electrical equipment during any one 15-minute interval during the billing period.
A kilowatt hour (kWh) is the amount of energy needed (kW X Hours) to run electrical equipment over time.
It is important to examine your operation. Does all of the equipment need to be running at the same time? If not, what can be turned off when other equipment is running? What energy efficiency improvements can be made?
Often there is equipment that is operated infrequently. If this is the case, can some other equipment be turned off while this equipment is running? The result may be a significant savings in your monthly demand charge.
This is a normal question asked by commercial and industrial members paying a demand charge. The average cost of kilowatt-hours can be driven up or down by the relationship between demand (kW) charges and energy (kWh) charges. Victory Electric refers to this relationship as load factor. Most members will look at their total costs of electricity:
kWh $ + kW $ + $ for service fees/taxes = Total $ / kWh = Average cost per kWh
This method of analysis will give each member a number to use for comparison, but the number will swing wildly from member to member because of the relationship between kW and kWh purchased––the member's load factor.
The definition of load factor is a measure of the efficient use of capacity. The formula is a ratio of average load to peak load. A high load factor is better than a low load factor when determining average costs.
By example, Member "A" with 720 hours in a month (30 days times 24 hours) and a 60 kW demand, purchased 10,000 kWh.
10,000 kWh / 720 hours x 60 kW = 23.1% load factor
Compare it to the Member "B" down the street who had a 30 kW demand and purchased 10,000 kWh.
10,000 kWh / 720 hours x 30 kW = 46.3% load factor
When the cooperative applies the exact same rate to both Member "A" and Member "B", the average cost per kWh for Member "B" will be significantly lower than the average kWh cost for Member "A" because "B" is making better total use of available energy. The load factor, or the purchase of kWh compared to peak kW demand, is the only difference between "A" and "B".
What could "A" do to improve load factor? 1) Lower demand by spreading out electric use, 2) vary equipment-operating times, 3) increase continuous electric use, and 4) add shifts of workers. High load factor always equals higher efficiency and lowers average kWh cost. Low load factors result in higher average kWh costs. It is in the best interest of the member and the cooperative electric system to engage in practices that improve efficiency, improve load factor, and reduce the average cost of electricity for both.