Reynaldo Pena & Associates

February 8, 2018Ms. [redacted] Revdex.com 400 Holiday Drive, Suite 220 Pittsburgh, PA 15220RE: ID # [redacted]Dear Ms. [redacted]:Thank you for your letter of February 3 regarding a complaint from a consumer of Valley Rural Electric Cooperative, Inc.The consumer in question has been...

a member of the co-op since August 2017. The average bill for the account (over the past six months) totals $81.98.Valley REC’s basic monthly charge (called “service fee” by the consumer) was $24 (not $25 as the consumer states); an increase of $4 to a total of $28 went into effect with the January 31, 2018 billing.This charge covers the cost of maintaining our distribution system, spanning more than 2,800 miles of line. It allows the co-op to invest in right-of-way clearing and replacement of old wire and poles. The revenue obtained through this charge is used to maintain substations and repair normal wear and tear on equipment. It also pays for administrative functions, such as the expense of billing consumers and maintaining records. Regardless of how many kilowatt-hours are sold, the basic monthly charge ensures each member pays a fair share of the cost of having dependable electric service available 24 hours a day. And this charge is comparable to that of the other 13 electric cooperatives in the state (seven higher, four lower and one the same as Valley’s per month charge).Some neighboring private power companies do have service charges that are lower than those of the cooperatives. They typically obtain most of their revenue through kilowatt-hour (kWh) rates and other charges separate from the service charge. In addition, area private power companies average seven times more consumers per mile of line than cooperatives. That means there are many more accounts over which costs may be spread. The need for a higher service charge for cooperatives is based on population density within their service territories, ensuring that costs for providing service are equitable among all rate classes.Valley Rural Electric’s total kilowatt-hour rate is $0.0995 (9.95 cents per kWh). The bulk of that amount is a pass-through cost for generation and transmission; $0,068 per kWh goes to our wholesale power supplier (Allegheny Electric Cooperative) for electricity and its transmission to our substations. The remaining $0.0315 per kWh is used by the cooperative for distribution expenses.The co-op’s kilowatt-hour rate is competitive with, if not lower than, that of other Pennsylvania electric cooperatives (eight higher and four lower) and neighboring private power companies. For example, First Energy - Penelec’s kWh rate is more than three cents higher than Valley REC’s rate.In addition to questions about Valley REC’s rates, the consumer requests reimbursement of costs for a space heater that was damaged. Co-op line personnel visited the property in December to replace a transformer that had failed. The co-op is not responsible for repairs to breaker or fuse boxes (called “electric box” by the consumer). Later the consumer called to request reimbursement for a space heater that was damaged. Co-op staff checked into the situation and left a telephone message for the consumer stating that we could attempt to turn in the claim to the cooperative’s insurance carrier; however, it is doubtful that the claim would be covered because the carrier does not consider equipment failure or defect to be within control of the cooperative and its personnel. In other words, there was no fault or negligence on the part of the cooperative or its employees; the situation was caused by an equipment (transformer) failure. Therefore, the claim probably would not be approved for reimbursement through Valley’s insurance company. The consumer could submit the claim through personal homeowner’s or renter’s insurance, if available. Co-op staff received no response to their message regarding this issue until receipt of your letter dated February 3.Finally, the consumer states that the cooperative has “created a monopoly in my area, being the only service provider where I live ... “. It is true that no other electric generation suppliers have chosen to do business with any electric cooperative consumers in Pennsylvania since customer choice was enabled in the late 1990s. Even if there were alternative suppliers for wholesale power, consumers do not have a choice as to which distribution provider delivers the electricity to their property; the territorial protection act of 1975 specifies service areas for all electric utilities in the Commonwealth. Thus, the cooperative did not “create a monopoly”; the legislature has ensured that consumers will have access to reliable and reasonably priced service no matter where they choose to live.Please let me know if you require further details about this account or the cooperative’s rate schedules, policies and procedures. Cooperatively yours,Luanne ** E[redacted] Vice President