While on vacation, I once had to pay a cover charge at a bar. Once inside, I still had to pay for my drinks and food. I didn’t complain. I have worked with the concept for over three decades now.

In the utility world, our cover charge is called an availability charge. Whether you use 1-kilowatt hour or not, there is a cost involved in the poles, wires and transformers standing by waiting for you to flip a switch.

The bar scene was the same. They didn’t care if I ate or drank. They had my cover charge to pay for kitchen equipment, drink dispensers and wages, in the event I wanted a drink or an item from the kitchen at a moment’s notice.

As we move closer to the rate increase I mentioned a few months back in this column, we are focusing more and more on the availability charge. For residential service, it is currently $15 per month. When we look at our past cost of service studies, they tell us we should be charging $23 per month.

This is no surprise. In fact, you can probably find some reference to it in information surrounding our last rate increase in 2011. Back then, we had the option of going from $13 to $23 while moving the energy charge lower. While the visual impact of a $10 increase is obviously huge, the lowering of the energy charge would have made the overall impact very small.

At that time, the management team and your board of directors agreed that we did not want to make the big jump. Instead, we went from $13 to $15 with a minor adjustment in the energy charge. There was a consensus that we would increase the availability charge further when we needed revenue in the future.

So, while we talk about cost-based rates, Cherryland’s rates are not yet truly based on the cost of service. Our energy charge is higher than it should be because our availability charge is lower than the “all-in” costs of covering the equipment necessary to make electricity available at the flip of a switch.

Rates are debatable, arguable and, after the core numbers are crunched, very much a product of the philosophy of your board and management team. Other utilities have other viewpoints. It doesn’t make either of us right or wrong.

Another twist is the very small but rising tide of renewables and members who want to generate their own power. As a utility, if I cover my true cost of service in the availability charge, I don’t necessarily care what one individual member does in the form of energy usage. Everybody simply needs to understand that an increase in the availability charge is not an attack on a particular form of energy. It is the only way to maintain revenue to cover system costs should energy sales begin a downward trend.

Please just consider this “bar talk” for now. We are continuing to monitor our financial condition. There are no plans to jump our “cover charge” to $23 in one motion. When we are ready to make a recommendation to the membership, there will be an “open bar” for member comment and input prior to any cover charge decision.

Tony Anderson