Member newsletter for Southern Maryland Electric Cooperative

SMECO files for Distribution Service base rate increase

On May 1, 2024, SMECO filed a request with the PSC to increase its Distribution Service base rates. If approved, an average residential customer using
1,100 kWh per month would experience an overall increase of 10.9 percent in their total monthly electric bill, which amounts to $18.56 per month. We anticipate new rates will go into effect near the end of 2024.

Why is SMECO raising its Distribution Service base rates?

Rising costs caused by inflation, price escalation, and investments necessary to meet State of Maryland policies and legal requirements have outstripped the amount of revenue recovered through SMECO’s Distribution Service base rates. This financial gap puts SMECO in jeopardy of not meeting our obligations to lenders and fulfilling the policy objectives of the State of Maryland. The requested increase in the Distribution Service base rates will cover the necessary operational expenses, ensure our ability to meet our long-term debt obligations, and provide continued financial stability for SMECO.

We remain focused on our core commitment to provide affordable and reliable electric service to our members. The chart at right provides a good illustration of this focus on affordability, as it shows that the total cost of electric service for an average residential member has increased over the past eight years at a rate that is less than the rate of inflation in the United States.

Thanks to the consistent efforts and hard work of our team, SMECO has a demonstrated track record of providing safe and reliable electricity for our members. The costs to provide the reliable service our members have become accustomed to—and deserve—continue to rise due to the same inflationary pressures that have caused our food prices and other household bills to increase.

Filing a rate case is never a preferred option for SMECO. We have filed only three distribution base rate cases in the past 10 years, one of which included a request for a rate decrease. Our most recent distribution rate case was filed in late 2022, driven primarily by the need for SMECO to recover costs associated with our smart meter deployment. The requested cost recovery for this last rate case was based on much lower 2021 expenses. The costs of goods and services have increased dramatically since then.

Affordability of service is always top of mind for SMECO’s Board and management. We only file a rate case when it is absolutely necessary to do so in order to maintain the financial health and wellbeing of the cooperative, ensure continuation of safe and reliable electric distribution service for members, and meet the policy goals of the State of Maryland.

SMECO Residential Electric Total Bill Costs vs CPI Index (3/2016–2/2024)

SMECO Straight Talk