What does the "margin stabilizer" line item on my bill mean?
A margin stabilizer is a tool designed to help keep electric rates stable and predictable for our members, even as the cost of providing electricity fluctuates.
Here’s how it works:
Electric cooperatives operate on a not-for-profit basis, meaning we aim to collect just enough revenue to cover our costs and maintain a small margin for financial stability. However, external factors like changes in weather, energy demand or fuel costs can cause our revenues to vary significantly from year to year.
The margin stabilizer helps balance these fluctuations by adjusting rates slightly, either up or down, to ensure that we meet our financial targets without overcharging or undercharging members. If revenues fall short due to lower-than-expected energy usage (e.g., during a mild season), the margin stabilizer may increase rates slightly to cover the gap. Conversely, if revenues exceed our needs (e.g., during a period of high energy usage), the stabilizer lowers rates to return the excess to our members.
This system benefits our members by:
• Providing rate stability: You’re less likely to see sudden or drastic changes in your electric rates.
• Ensuring fairness: Members only pay what’s necessary to cover the cooperative’s costs.
• Maintaining financial health: The cooperative stays on solid financial footing to continue providing reliable service.
By using a margin stabilizer, we can better manage the ups and downs of energy costs and usage, ensuring that our cooperative remains a dependable and cost-effective energy provider for all our members and without implementing a full rate increase.
Facts about IEC's margin stabilizer
Approved in January 2018 by the IEC Board of Directors
From January 2018-January 2021, the margin stabilizer was
Charged the member: 21 months
Was not present at all/neutral/no change in fees: 38 months
Gave back a credit to the member: 26 months