April 13, 2022
Dear Member,
It seems the cost of everything we buy is increasing these days, and unfortunately, that includes electricity. I wanted to let you know that beginning in May, most members will see an increase in their monthly bills of approximately $15.00. This is a direct pass-through of the cost of purchasing the electricity we distribute to members.
Choptank’ s internal costs, the delivery portion of the bill, remain unchanged. We are doing everything we can to hold down internal costs, but we cannot control the increase in national and international energy markets.
As a member of a not-for-profit electric cooperative, you have the benefit of a dedicated staff working to bring reliable, affordable electric service to your rural location - at cost. Since our inception in 1938, the member-leaders of Choptank Electric Cooperative have prioritized the families, farmers and small businesses in the communities we serve. We do not have stockholders, so we do not have to make a profit to pay dividends. We work for you. Any revenue margins are returned to you through our capital credit program.
We belong to Old Dominion Electric Cooperative (ODEC), a generation and transmission entity owned by 11 electric distribution cooperatives. We buy 100% of our electricity through ODEC, which is similarly formed as a not-for-profit to generate and transmit electricity at cost.
From a generation perspective, ODEC has been subject to the significant increase in U.S. prices for energy commodities such as crude oil, natural gas, gasoline and diesel fuel. It has been very unusual in recent years to have any mid-year rate change by ODEC, but the higher costs incurred for natural gas used to generate electricity have necessitated this rate increase. Similar costs are being faced by other utilities in the mid-Atlantic and other regions of the country – this is not unique to us or to ODEC.
The high winter demand for natural gas coupled with cold temperatures - particularly in January - impacted the price of natural gas, and significant volatility on some days drove short-term prices even higher. During this time, ODEC maintained reliability of our generation assets. ODEC has a robust, board-directed hedging program to mitigate fuel and power cost volatility; however, significant load increases and volatility during cold winter days caused ODEC to incur additional costs.
Russia’s war against Ukraine and other global economic factors - including the expected increased export of U.S. gas as liquified natural gas to Europe and Asia - further exacerbate price increases and volatility.
We hope this increase in energy prices is temporary. If the past is any indication, the cost of energy fluctuates from year to year. Over the last several years, our annual power cost adjustment has resulted in a credit to members. When the cost of energy stabilizes, we look forward to passing those savings on to you again.
You can be assured that the member-elected Board of Directors and the leadership team here at Choptank are working hard to serve our 55,000+ members on Maryland’s Eastern Shore. We recognize your concern about prices, and we are committed to providing you the best options available during these uncertain times.
Sincerely,
MIKE MALANDRO
President & CEO
P.S. If you have questions or need assistance, please contact our local member services team at rates@choptankelectric.coop or read more at https://www.choptankelectric.coop/rates.