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Performance, rates and value

Effective June 2017, Tipmont’s
service charge will increase from
$29 per month to $32.50 per
month for residential members.
The rate adjustment pays for
continued investment in the
distribution system to maintain
service reliability.

System performance

In 2012, Tipmont launched an initiative to
improve your service reliability while continuing
to meet the growing demand for power in our
service area. Since then, Tipmont’s crews have
rebuilt more than 120 miles of overhead lines
and have installed more than 371 miles of
underground lines. Many overhead copper lines
were replaced with aluminum lines, a much
more durable and lasting product. Tipmont also
added five new substations to the distribution
system to meet the increasing demand for
power, not only today, but for decades down the

We also moved from a six-year to a threeyear
tree trimming cycle. As a result, outages
caused by trees have dropped by 64 percent
from 2012. For the factors we can control, these
improvements have increased service reliability
to levels not seen in Tipmont’s recent service
history. Tipmont members will reap the benefits
of reduced outage frequency and duration for
years to come.

System investment
and low interest rates

Tipmont’s total utility plant assets increased
31 percent over a five-year period from 2012
to the end of 2016. These investments in poles,
conductor, substations and related plant are
funded through long-term borrowing and the
rates you pay. Low interest rates in recent years
combined with a smart borrowing strategy have
helped us hold rates down. In fact, Tipmont’s
blended interest rate in 2012 was 4.1 percent,
and at the end of 2016, our blended interest rate
was 3.4 percent, yielding a significant decrease
in our cost of capital.

To maintain a healthy balance, part of
the revenue generated from rates is applied
to system investments each year. Generally
speaking, Tipmont funds approximately onethird
of capital spending from rates and the
remaining two-thirds from long-term borrowing.
This balanced approach ensures members who
benefit from the distribution system pay for the
system over its useful life while also allowing
Tipmont to maintain financial flexibility.

Service Charge

There are often questions about the purpose
of the service charge. The service charge
helps pay for maintaining and operating the
distribution system and is largely independent
of energy sales. This includes the poles, wires,
transformers and service personnel necessary to
make the system work, regardless of how much
energy is used. The service charge contributes to
covering these fixed costs.

Delivered value

Over a five-year period from 2012 to 2017,
the total energy services cost for the average
residential member has increased by less
than 1 percent per year while the cumulative
rate of inflation over the same period
is more than 6 percent. In other words,
Tipmont’s rate adjustments over the last five
years are significantly less than the general
increase in prices. I’m particularly proud of
this accomplishment especially given the
significant increases in performance and
system investment Tipmont has delivered to its
membership over the same period.

Further information and
member meetings

A web page with more information, including
how the rate adjustment affects each rate class,
is available at tipmont.org/2017rates. We’ll be
holding member meetings on June 6 at Fountain Central High School and June 7 at Battle Ground Middle School to help answer your questions.
It’s important that we hear from you, and I hope
you’re able to attend. More details are available
at tipmont.org/2017rates.

Ron Holcomb

Ron Holcomb

Ron is a 30-year veteran of the electric utility industry with extensive experience in power supply, advanced grid technologies, essential service operations, economic development and value-driven growth initiatives for combined electric and telecommunication utilities. During his career, he has led three utilities as President/CEO and provided management consulting to utilities across the country. Ron joined Tipmont as CEO in summer 2013. He holds a B.S. in Physics from Austin Peay State University and an MBA from Murray State University.

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