When Farmers RECC began to electrify the rural areas of Barren, Hart and Metcalfe counties in 1938, making electricity was a fairly simple process. Coal mined here in Kentucky was burned at power plants, making steam to turn turbines. The turbines created electricity that was sent over lines that stretched over our service area. It was efficient and inexpensive, provided jobs and opportunities and changed the living standard for rural Kentuckians.
Like everything else, 87 years later, making electricity is far more complex. Farmers RECC owns, maintain and operates a distributions system of over 3,700 miles of line across portions of 11 counties. The system consists of more than 62,000 poles, 22,000 transformers, 27,000 meters and 18 substations, not to mention the thousands of other components that make up our system. This is not an inexpensive business to be in, and utilities are not immune to the inflationary pressures that the rest of the country has experienced. As we have all seen, since January 2020, the Consumer Price Index has risen by 23.2%. At Farmers RECC, our costs for essential materials have increased even more dramatically. For example, primary wire has increase by 58%, transformers by 97% and ground wire by 51%.
Unfortunately, while we continually look within our operations to seek improvements and cost reductions before asking our members to pay for service, all of these factors mean we have to occasionally adjust our rates to provide the necessary monies to keep delivering your service.
Farmers RECC is filling an application in May with the Kentucky Public Service Commision to implement a modest increase in rates in early 2026. The overall requested increase in 3.94%. Our last adjustment, which was for less than a 4% increase, was in 2023.
The requested increase to our average residential member would be $7.99 per month and will come in the form of an increased customer charge - up from $18.12 ro $27.79 per month. The kWh energy charge would decrease - down from $0.10666 to $0.099057. The fixed increase on the customer charge provides your cooperative with a predictable flow of revenue and keeps from negatively impacting you if the weather is unusually severe and you use more kWhs of energy. It is essential to note that we are maintaining our traditional rate structure which consists only of a fixed customer charge and a flat kWh energy rate.
We understand that any increase can be a burden to our members, and we have endeavored to keep the increase as small as possible. I'm a member of Farmers RECC just like you, and while I'm never eager for cost increases, we all know it is occasionally necessary.
In spite of the inflation, we have experienced, we have been successful in eliminating, reducing and slowing the growth of many of our costs.
Over the past 10 years, we have significantly invested in our distribution system, continued to improve of right-of-way clearances, cycle inspected our system each day to find potential problems, which resulted in replacing thousands of damaged or aged poles, and we have implemented new technology to improve operational efficiency. Alos, in an effort to further reduce costs, we switched our annual meeting to a drive-thru format. However, as you can see, despite our efforts, the overall costs of doing business have steadily increased over the years beyond what we absorb.
I promise we will continue to strive to be good stewards of your money and commit to providing you with the level of service you expect and deserve.
Although a lot has changed in the past 87 years, what hasn't changed is Farmers RECC's commitment to our members. Our team of dedicated employees is her to serve our members, and we'll continue to do so for the next 87 and beyond.
Toby Moss, President and CEO