Straight Talk About Your Electric Bill

SMECO files for Distribution Service base rate increase

On May 1, 2024, SMECO filed a request with the Maryland Public Service Commission (PSC) to increase its Distribution Service base rates. Following the PSC’s full review process, the Public Utility Law Judge overseeing the case released a proposed order, which became final as of November 27, 2024.

The initial rate case filing requested a $37.9 million increase in distribution revenue, as well as additional rate design changes. The PSC’s final order allows a $22.8 million increase in distribution revenue. The approved rates mean that a residential customer using an average of 1,100 kWh per month would experience an overall increase of 4.7 percent in their total monthly electric bill, which amounts to $7.95 per month. The new rates become effective for bills rendered on and after December 1, 2024.

Affordability of service is always top of mind for SMECO’s Board and management, and filing a rate case is never a preferred option. 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.

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.

Why is SMECO raising its Distribution Service base rates?

The Distribution Services charge on the bill covers the cost of delivering the electricity supply from the wholesale market to members’ homes or businesses. The facilities charge and the distribution charge on the bill cover the costs of cables, poles, substations, vehicles, office buildings, and employees, and more. SMECO’s investment in these facilities doesn’t change with the weather or the amount of electricity customer’s use.

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 put SMECO in jeopardy of not meeting our obligations to lenders and limiting our ability to make necessary upgrades to the infrastructure and ensure reliable service. The increase in the Distribution Service base rates was requested to help cover necessary operational expenses, improve our ability to meet our long-term debt obligations, and provide continued financial stability for SMECO.

While the cooperative works hard to reuse, recycle, and repurpose—maximizing the value of every dollar spent—SMECO doesn’t cut corners on its investment in reliability. And the cost of reliability increased exponentially in 2023.

For example, the costs and lead times for necessary infrastructure needed for the electric distribution system have skyrocketed.

  • Breakers for the transmission lines that feed the substations cost $36,000 in 2021. These same breakers are now $65,000 (an 80 percent increase) and the lead times are now 80-plus weeks.
  • Steel used for steel poles has increased by more than 40 percent since 2021.
  • Labor and construction costs, coupled with equipment and maintenance costs for the cooperative’s workforce and fleet, have increased dramatically since 2021.
  • Pad-mount transformers—the transformers used in neighborhoods for homes and businesses—cost $2,200 in 2021. Today, those same transformers cost $6,600—a 200 percent increase.

As costs increase, SMECO’s management continues to take the steps necessary to ensure the continued financial wellbeing of the cooperative. In an ever-changing economic landscape, financial responsibility remains paramount to the cooperative’s success and longevity. Through prudent financial management, sound investment strategies, and transparent governance practices, SMECO upholds its fiduciary responsibility to its members, ensuring the continued stability and resilience of the cooperative for generations to come.

Residential rate changes

The list below reflects the changes to the rate on the distribution services portion of the bill and general charges. For a comprehensive list of current rates, please see the tariff at smeco.coop/rates.

Residential Distribution Charges

Charge Previous charge Proposed charge New charge
Distribution $0.04704 per kWh $0.06300 per kWh $0.05404 per kWh
Facilities $9.50 $10.50 $9.75

General Charges

Charge Previous charge Proposed charge New charge
Service Application $25.00 (with meter read)
$10.00 (without meter read)
$16.00* $16.00*
Returned Payments $11.00 $15.00** $15.00**
Reconnection $36.00 (normal working hrs.)
$133.00 (outside normal working hrs.)
$14.00* $14.00*
Meter Tampering Investigation $252.00 $275.00** $275.00**
Check Meter $28.00 $0.00* $0.00*

*Reflects cost savings from deployment of AMI system

**Reflects current costs

General Service rate changes

The list below reflects the changes to the rate for the General Service rate classes. For a comprehensive list of current rates, please see the tariff at smeco.coop/rates.

Small Telecom High Load Factor

  Previous charge Charge as of 12/1/24
Distribution Charge $0.03176 per kWh $0.02809 per kWh

General Service Small – GSS

  Previous charge Charge as of 12/1/24
Secondary
Distribution Charge $0.03669 per kWh $0.04488 per kWh
Primary
Distribution Charge $0.03486 per kWh $0.04264 per kWh

General Service Medium – GSM

  Previous charge Charge as of 12/1/24
Secondary
Distribution Charge $0.03120 per kWh $0.04099 per kWh
Demand Charge $0.96 per kW $1.32 per kW
Facilities Charge—1 Phase $ 18.28 $ 21.61
Facilities Charge—3 Phase $ 26.15 $ 30.92
Primary
Distribution Charge $0.02964 per kWh $0.03894 per kWh
Demand Charge $0.91 per kW $1.25 per kW
Facilities Charge $ 51.12 $ 60.44

General Service Large – GSL

  Previous charge Charge as of 12/1/24
Secondary
Distribution Charge $0.01452 per kWh $0.01852 per kWh
Demand Charge $5.08 per kW $6.64 per kW
Facilities Charge—1 Phase $ 18.28 $ 21.61
Facilities Charge—3 Phase $ 26.15 $ 30.92
Primary
Distribution Charge $0.01379 per kWh $0.01759 per kWh
Demand Charge $4.83 per kW $6.32 per kW
Facilities Charge $ 51.12 $ 60.44

The Standard Offer Service (SOS) energy charge is the cost of the electricity supply used in that billing cycle. The cost of energy is a direct, pass-through cost; SMECO doesn’t mark it up in any way as other “for-profit” energy suppliers may do. In 2023, the SOS energy charges came down over 16 percent between January and December. In 2024, SOS prices continue to trend within five percent of the base energy rate. The energy charge is not changing as part of this distribution base rate case.

Energy use changes seasonally

When it’s cold in the winter and your heating system runs, or when it’s hot in the summer and your air conditioning runs, your bill will be higher. Your bill is at its lowest in May and October, because you typically use less energy in those months. The chart below shows the average monthly temperature during 2023.

Monthly Average Temperatures for 2023

Average temperatures, January to December 2023

Control your heating costs:

  • Have your heating system serviced annually
  • Clean or replace filters monthly
  • Find the coolest comfortable setting (We recommend 68°F in winter)
  • Install an eligible smart programmable thermostat and participate in SmartTemp Year Round
  • Take advantage of sunlight to help heat your home
  • Weatherize doors and windows
  • Ensure duct work is sealed and insulated
  • Insulate your attic, walls, and crawlspace

Control your water heating costs:

  • Set your water heater thermostat between 120 to 125 degrees.
  • Use cold water whenever possible, such as when washing clothes and only run full loads.
  • Insulate your water heater (check manufacturer recommendations).

Time-of-Use Rates

During peak times, energy costs are higher for SMECO, and during off-peak times, costs are lower. On SMECO’s SOS rate, the per-kWh cost doesn’t fluctuate. But, for customers who choose SMECO’s Time-of-Use (TOU) rate, energy charges will reflect the peak and off-peak price difference.

TOU rates can help customers save money if they use less energy during peak times. To shift energy use, residential customers can run kitchen and laundry appliances, pool pumps, and other equipment during off-peak hours. Find out more.