All my life, I’ve heard the phrase “comparing apples to apples.” Sometimes, we try to compare things so different that there’s no way to draw a fair comparison. In those cases, we say “apples to oranges.”
I’m often asked how our rates compare to other utility providers. Even though we aren’t ordinarily competitive with neighboring utilities, we regularly assess our rate structure to see how we measure up.
In July, a Pioneer Electric member who used 1,500 kWh paid $24.84 more than they would have with Alabama Power Company. The difference for someone using 3,000 kWh was $12.16.
But those comparisons aren’t “apples to apples.” Customer density refers to the number of customers served per mile of utility infrastructure (such as power lines). It significantly impacts the cost of delivering services and, consequently, the rates charged to customers.
Pioneer Electric maintains around 2,700 miles of distribution line to serve 12,800 members, which means we serve 4.7 members per mile of line. Of the 22 electric cooperatives in Alabama, only two have a lower density than Pioneer Electric. Those two serve a greater industrial load than we do. It’s the nature of our service area — our members are spread out in rural areas.
To compare apples with apples, Alabama Power Company serves 17.9 customers per mile of line. Simply put, our costs are spread across fewer members.
Another difference between us and Alabama Power is the makeup of our members. About 94 percent of our members are residential, compared to Alabama Power’s 43 percent. The cost of electricity can be lower when providing large amounts of power to a few commercial or industrial members and would be a great help in controlling costs for our residential members.
Our cost to members is higher than Alabama Power’s, but that difference is minimal. When you consider that their density is four times higher than ours, it’s like comparing an apple to an orchard of oranges.
The solution? Growth. When I first came to Pioneer Electric in 1977 as a young engineering student, the co-op had around 13,000 members. Now, 47 years later, we have 12,800 members. Our 2024 Load Forecast projects nearly no growth in the next 20 years. Over the past 10 years, Pioneer Electric has lost more than
5 million kWhs in annual sales due to LED lighting, more efficient equipment, and the loss of larger industrial loads.
Pioneer Electric’s service area is a great place to live, and we could solve our density problem by encouraging people and businesses to locate here.
Despite the challenges, we are living up to our promise of delivering reliable electricity to members at a reasonable and affordable cost. If you have questions about your power bills, please call us about optional rates that might work better for you.
On a different note, I am updating you on the status of our Greenville office. We have explored the possibility of constructing a new facility to address logistics, space and safety concerns. We are also considering a plan to remain in our existing facility. As with any 50-year-old building, repairs must be made if we stay in our current location.
The Board will evaluate these options to determine which best suits our long-term needs and budget. We will update you later this year on the best option and its cost.
Finally, I hope you’ll make plans to join us at our Annual Meeting on Saturday, October 12, at the Butler County Fairgrounds. More information is on pages 6 and 7 of this issue.