Your Electric
Rates

UDWI's wholesale electric supplier, Hoosier Energy, made a change in the way that it charges for wholesale power that became effective April 1, 2010. Hoosier Energy's new wholesale rates provide UDWI with more accurate price signals about what it actually costs Hoosier Energy to supply power at different times of the year. The price that UDWI will pay to Hoosier is the highest during the summer months of June, July and August when the weather is hot and customer demands for electric energy are high; is next highest during winter months of December, January and February when customer demands are nearly as high as the summer; and is lowest during the months of March, April, May, September, October and November when the weather is typically milder and customer demands for electric energy are low.

The reason for these seasonal price differences is that Hoosier Energy has had to construct some electric generating facilities to meet customer needs during the hot summer months and cold winter months that are only used during the summer and winter not during the other months of the year. This is necessary because electric energy cannot be cost effectively stored and must be produced at the instant that it is consumed by customers. This makes it necessary to construct electric generators for the sole purpose of meeting peak customer needs during the summer and winter months. Hoosier Energy's new seasonal summer and winter wholesale rates accurately reflect the cost of the electric generators used to meet customer needs during the summer and winter which are not needed during the milder months of the year.

UDWI's residential rates reflect these seasonal price differences for wholesale power from Hoosier Energy with a rate of 13.601 cents per kilowatt-hour in summer, 11.607 cents per kilowatt-hour in winter, and 7.338 cents per kilowatt-hour in the months of March, April, May, September, October and November. This is necessary to better match the revenue that UDWI collects from its customers with the payments for wholesale power that it must make to Hoosier Energy. If UDWI charged a single flat rate during the year, it would collect less than it needed to pay Hoosier Energy during the summer and winter months and more than it needed to pay Hoosier during March , April, May, September, October and November. This would be a significant cash flow problem for UDWI that can be avoided by UDWI charging seasonal rates to its customers that mirror the payments it must make to Hoosier Energy.

Under the new retail rates, customers will pay more than they had previously paid during the summer and winter if they do not modify their usage and will pay less than they had previously paid during the other months. The net effect over the course of a year will be a small increase in the amount that customers pay, because the new rates from Hoosier Energy included a small wholesale price increase in addition to the change to a seasonal rate design. The higher prices during the summer and winter provide a strong incentive for customers to conserve and use energy as efficiently as possible during these times of the year. Conservation and energy efficiency efforts by customers will pay dividends in the long run as Hoosier Energy may be able to avoid the construction of additional generating facilities. Sometimes it is difficult to take the long view when the pain of higher summer and winter bills comes before the gain of avoiding costly new generation facilities in the future. However, it is necessary to take this long view when it takes between three and four years to plan and construct a new generation facility. We need to work together and act now in order to keep the costs of electric service down in the future.

We know that change isn't easy and will do whatever we can to help our customers adapt to these changes. These changes are necessary to keep the cooperative financially solid so that it can provide safe, reliable service to its customers, both now and in the future.

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Brian Sparks,
CEO