Q&A

JMEC is not-for-profit, cost-of-service electric cooperative, whose members have significant say in how the system is run as they elect the board of trustees who govern the utility. Cooperatives seek the lowest, long-term costs since its investors are its members. IOUs are owned by their shareholders who seek to maximize earnings per share and rate of return and look for stable earnings and dividends as well as some growth.

JMEC seeks the best balance between the needs of its members for reliable service and low rates and the needs of the cooperative to be financially sound so we are able to meet those needs at the lowest long-run costs.

JMEC made a strategic decision to place most of the rate adjustment in the Facility Charge like every other electric cooperative in the state has done already. The kWh rates will see very slight changes. Focusing on the Facility Charge accomplishes things such as:

1. It has the least impact on our lower income members.
   a. The residence of a lower income member can be less energy efficient often requiring a higher use of energy.
   b. A higher Facility Charge closer to the actual ($33) cost to bring power to the member’s door assures that lower income members are not subsidizing through higher energy charges the cost of service for the often more affluent seasonal and net metering member.

2. Better enables JMEC to plan and invest in its system so we can meet the needs of our members for safer, more reliable service without being dependent on energy sales.

3. Brings JMEC’s Facility Charge to the average – in the exact middle – of all New Mexico electric cooperatives.

With this change, JMEC will not depend on selling more electricity to cover the cost of maintaining our system. The higher Facility Charge will better cover the fixed costs of operating the system and the energy charge will cover the cost of the energy we deliver to your home or business.

If approved, it could be well into 2023.

It will have been 10 years since the last rate increase went into effect.

Since then, U.S. price index for all items has increased nearly 26 percent.¹

It is not reasonable to expect to safely operate an electric utility with 2012 revenues. For two years, the cooperative’s regular operating expenses have exceeded the revenue it collects through rates.

Jemez is legally obligated to comply with federal regulations mandating minimum financial metrics and this rate change must occur for the cooperative to do so.

The board of trustees is very sensitive to the economic burden experienced by many of our members due to the pandemic and has approved a rate adjustment that will have the least impact on our lower income members while still allowing JMEC to comply with mandated minimum financial metrics.

Cooperatives throughout the U.S. periodically hire independent, third-party experts to conduct a cost-of-service (COS) study to determine what it costs the cooperative to provide electric service to each class of member (like resident, commercial, industrial), determining the amount of revenue needed to do so while minimizing the impact on members of any rate increase.

In making these decisions, the cooperative’s board of trustees wears two hats – they must ensure the cooperative is financially sound while at the same time representing the interests of its members. In October 2017, for example, JMEC’s board of trustees did not change rates after a COS study showed a need for a small increase.

The board of trustees did consider it in October 2017 when a cost-of-service study showed a need for an increase but decided not to request it. The board’s strategic focus on the lowest practical rates for members eventually ran its course, bringing the cooperative to a point where its regular operating expenses are more than the revenue it collects through rates.

It greatly depends on the economy. For instance, a rise in inflation could have bearing on the timing of any future rate change. When growth in the cost to operate the system requires it, as a not-for-profit, cost-of-service provider, JMEC will consider at that time only what is necessary to operate the cooperative while providing safe, reliable electric service.

In 2020, Jemez experienced an unusual loss of membership sales. Our largest load from the oil field sector suspended its operations due to that industry’s changing economy while casinos, schools and small businesses all shut down following pandemic-related orders. The pandemic only worsened what was already an unsustainable revenue model.

Regulators require that the consumption data of the year tested be “normal.” JMEC’s pandemic-year 2020 consumption data was not normal. In fact:

• 2020 and 2021 produced drastically higher kWh sales for residential members as in pandemic conditions people experienced layoffs, job loss or worked from home while school children resorted to remote learning. Using numbers from these years would allocate much more expense than normal to the residential rate class.

• 2020 and 2021 produced drastically lower kWh sales for commercial members including schools, casinos, restaurants and retail stores that have been closed because of the pandemic. Under this scenario this rate class would be allocated less expense than it would in a year without a pandemic.

The New Mexico Public Regulation Commission required JMEC to do a new cost-of-service study based on the most recent 12-month period.

While the original COS study also indicated JMEC needed an overall increase of about 11 percent, the board of trustees approved a lower rate request (9 percent) at that time.

The higher proposed rate increase reflects the change in realized expenses for the updated filing based on the 12 months ending February 28, 2022. The increase in the cost of benefits, property taxes, insurance, materials, the catch-up system maintenance required by our insurers and more that were ramping up in just the last year had not been fully reflected in the cooperative’s operating costs.

Yes. All the cooperative’s member classes will pay their fair share of the rate change.

No. All ROW expenses are entirely paid through the rate riders on everyone’s bill and are reconciled and recalculated annually as noticed to all customers in February each year.

Patricia Martinez, Office Manager for JMEC, is the contact person for this rate change. She can be reached at:

Phone 505.367.1191
Email pmartinez@jemezcoop.org

We’re committed to making sure all inquiries to discuss the rate change are satisfied.

Jemez’s rates have been the lowest of New Mexico’s 11 electric cooperatives served by Tri-State G&T for the last 20 years. After the updated proposed rate change goes into effect, JMEC’s rates will be the third lowest in this peer group for the average (722 kWh) resident.

No, and while the new building is not the cause of the rate change, the cost to operate the new building, as with the old building and just as with poles, wires and service trucks, is included in the overall cost of providing service.

Much thought and consideration was given before it was decided in 2016 to replace the 50-year-old facility, Among the deciding factors:

• The old facility required numerous immediate renovations such as complete environmental remediation to address asbestos and lead paint; replacement of its failing septic and heating, cooling and ventilation systems; retrofits to meet all Americans with Disabilities Act requirements.
• A new facility would incorporate design for worker safety and efficiency, energy savings, use of environmentally friendly materials and cost less to operate over time.

At the time the building was approved the cooperative was financially strong, JMEC members were timely in paying their monthly bills and a pandemic was not on the horizon, so it was decided to pay for the new construction out of cash reserves. The new building is debt free and an asset on the cooperative’s balance sheet.

Jemez constantly evaluates our day-to-day operations for opportunities to improve and gain efficiencies,  particularly so each fall as we develop the cooperative’s annual budget.

• In the pandemic season:
• Hiring was frozen.
• Scheduled pay increases were decreased or delayed.
• New vehicle purchases halted.
• Capital expenditure projects almost completed stopped.
• Maintenance projects were deferred.

On an ongoing basis JMEC:

• Implements technology such as our outage management system or advanced metering infrastructure to help control costs, provide operational efficiencies and increase reliability.

• Facilitates staff and energy efficiencies in the new building such as with better equipped and located IT server room, mechanic and warehouse shops; LED lighting; high-efficiency heating and cooling system; energy-saving insulation and windows.

• Competitively bids all contracts to ensure quality service at the best possible price.

• Works with state and federal lawmakers to ensure issues affecting our rural members are heard and addressed. Recently, this has included access for Rural Utilities Service (RUS) borrowers like JMEC to low-cost capital, for example, to refinance loans without penalties at interest rates much lower than the 4 to 6 percent the cooperative pays now.

The rate change will improve the recovery of our fixed costs that reoccur monthly whether or not a single kilowatt-hour is used. Your cooperative’s margins (profits) are to be allocated to members in the form of patronage capital and returned in the form of capital credit payments to you.

The cooperative must make more money than it spends each year to stay in business and operate in a financially sound manner. As a member of JMEC, you receive a report of your portion of the cooperative’s margins (profits) for the year. JMEC keeps track of this and returns it to each member over time. This report is called a capital credit allocation notice and is included on one of your billing statements.

No. JMEC is a not-for-profit electric cooperative. Our not-for-profit status mandates that any net margins(profits) made by the cooperative must be allocated to the membership in the form of capital credits.

JMEC last distributed capital credit allocations in 2017 for members who were part of the cooperative in 1985, 1986 and a small part of 1987. It is intended that JMEC distribute capital credits more frequently as new rates help stabilize the cooperative’s financial situation.

The cooperative has several options to help members manage their electricity bill:

• Online and automatic payment options
• Pre-paid program
• Levelized/budget billing
• There are also several programs to help members lower electric costs:
  • Rebates can be found at https://www.jemezcoop.org/rebates for when you purchase energy efficient appliances and lighting.

  • Jemez cooperative billing clerks are happy to discuss ways to help identify energy saving measures and ways to identify any household energy hogs.

• For those who have had trouble keeping up with their bill, our customer representatives are ready to help you with short- and long-term installment payment agreements.
• There also are assistance programs through other organizations that may help certain qualifying households. You can find a list of them and their contact information at https://www.jemezcoop.org/assistance-program