2026 SEC Rate Adjustment

1. Why are SEC’s electricity rates adjusting in 2026?

In 2026, SEC’s Demand Charge was increased by $.38 cents per kw, and the Power Cost Adjustment (PCA) increased by $.00717 cents per kWh. PCA was adjusted again effective May 1.

• Almost 70% of this increase is driven by higher wholesale power costs (out of SEC’s control), which flow directly into the PCA with no markup.
• The remaining 30% is needed for SEC to invest in:
  • Maintaining our commitment to clean rights-of-way
  • Securing and modernizing electric grid
  • Enhancing technology to improve service and keep rates affordable
  • Workforce development

2. What are wholesale power costs?

Wholesale power is the electricity your cooperative buys in bulk from a generation and transmission provider before it is delivered to your home or business. SEC’s provider is Old Dominion Electric Cooperative.

3. How does SEC recover wholesale power costs?

SEC recovers the majority of the costs through the Energy Supply Service (ESS) rate. This rate has not changed since 2020. The remaining costs are recovered through the Power Cost Adjustment (PCA) rate. This rate changes, at least annually, to pass through power cost increases and decreases from ODEC.

4. Why is the PCA increasing?

The PCA is driven by increased wholesale power costs (capacity and transmission).

5. Why are wholesale power costs increasing so dramatically?

A. Demand is outpacing supply

Electricity demand in Virginia is expected to double in the next decade due largely to hyperscale data center growth. Dominion’s peak system load is projected to grow from 24 GW → 45 GW. Infrastructure development that once spanned a century must now occur within roughly ten years.

B. Supply is constrained

• Recent laws and regulations have raised operating costs for 24/7 baseload generation (natural gas and coal).
• Some base load generating plants have retired.
• Intermittent sources like solar and wind (even when paired with battery storage)cannot reliably support around-the-clock demand, particularly from data centers.

6. Why is SEC increasing the demand charge?

The demand charge is increasing by $.38 cents per kw, for residential accounts. For a typical residential account this would equate to an additional $3.23 per month. This money helps fund the infrastructure required to deliver reliable electricity to all members, especially during periods of high usage.

SEC is increasing the demand charge because the cooperative is investing in:

• Maintaining clean rights-of-way to reduce outages, prevent vegetation-related faults, and lessen storm impacts
• Strengthening grid resiliency and modernizing infrastructure (eg. -Strategic Undergrounding) to improve reliability and meet evolving energy needs
• Deploying high-performing, secure technology that supports a modernized electric system and enhances reliability
• Developing a skilled workforce trained to operate and maintain today’s more advanced and complex grid

These investments help ensure safe, reliable, and affordable service for all member-owners today and into the future.

7. What are capacity costs and why do they matter?

Capacity costs ensure the lights come on every time you flip the switch, even during extreme weather.

Capacity represents the guarantee of readiness, not the energy itself.

Capacity prices in the PJM market have risen more than tenfold, from $28/MWh-day → $329/MWh-day in just three years, directly impacting the PCA.

8. What are transmission costs and why are they increasing?

Transmission costs cover the movement of electricity across the high-voltage regional grid before it reaches SEC’s system. Transmission lines carry power over long distances from generation resources to the areas where it is needed, after which SEC takes over to distribute that electricity to homes, farms, and businesses.

Because SEC is a distribution cooperative, it does not own or control the high-voltage transmission system and must pay transmission providers (Dominion and AEP) for this essential service.

SEC has seen transmission costs increase in excess of $14 million over the past five years, directly affecting wholesale power costs and the PCA. The primary reason for this is due to the increase in the demand for power (primarily driven by data centers) in Virginia without any investment in “always-on” generation (nuclear, natural gas and coal). Without available “always-on” generation, the energy deficiency is filled by importing from other states to serve the needs of the load. This requires more transmission to be built.

9. Why does Virginia rely so heavily on imported power?

Virginia’s reliance on imported electricity is driven by the following (which is primarily influenced by Virginia’s Energy Policy):

• Reduced in-state baseload generation
• Retirements of coal and natural gas plants
• Delays in adding new dispatchable resources
• Rapid growth in statewide electricity demand
• Increased dependency on intermittent renewable sources without equivalent backup generation

10. What is SEC doing to reduce the impact on members?

SEC is actively working to manage the rising cost environment by:

Managing Wholesale Power Costs

• Coordinating with ODEC to manage peak usage
• Evaluating battery storage solutions to help offset future wholesale cost spikes

Enhancing Member Services

SEC is expanding programs to help members save energy and reduce costs. New offerings launching soon include:

• A smart thermostat program to help reduce usage during peak demand
• An online efficiency marketplace offering discounted products, including:
  • EV chargers
  • Smart thermostats
  • Advanced power strips
  • Water-saving devices
  • Additional energy-efficient home products
• A manufactured home weatherization program to improve comfort and reduce energy loss
• Enhancements to SEC’s energy-audit program and expanded tools to help members better understand and manage their usage

Operational Efficiency

• Pursuing internal cost-saving measures
• Investing strategically to avoid more expensive failures in the future

Advocacy

• Working with cooperatives and policymakers
• Promoting balanced, reliable energy policy that restores 24/7 baseload generation in Virginia

11. Why can’t SEC absorb the cost increases instead of passing them on?

SEC is a not-for-profit, member-owned cooperative, meaning we do not have shareholders and we only collect what it costs to deliver power and nothing more.

Passing through actual wholesale power and infrastructure cost increases ensures transparency,long-term stability and that today’s member is paying their fair share.

12. Does the Board approve this rate adjustment?

All rate changes must be submitted to the Virginia State Corporation Commission (SCC) for acceptance or approval, depending on the filing.

In addition to SCC approval, SEC’s Board of Directors also reviews and approves rate adjustments.

13. How do I get in touch with my Director?

Members may contact their elected Director at any time.

14. Does SEC profit from these increases?

No. SEC is a not-for-profit cooperative. All revenue is used to:

• Purchase power
• Maintain and improve the system
• Support operations
• Employ staff
• Deliver member programs and services

15. What can members do to manage their bills?

Members should begin by utilizing SEC’s SmartHub App (one-stop shop for anything and everything you need to manage your account). Other items include:

• Participate in SEC’s new energy programs launching in 2026
• Use online energy-efficiency tools (Tips, calculators and resources on SEC’s website)
• Sign-up for levelized billing (Levelized Billing averages a member’s electric usage over the past 12 months to create a predictable monthly payment amount. This helps smooth out seasonal spikes, ideal for members who prefer consistent, stable bills)
• Enrolling in Prepaid Billing (Prepaid Billing allows members to pay for electricity in advance instead of receiving a monthly bill. Members can monitor usage in real time and add funds as needed, helping to manage costs more closely and avoid large end-of-month surprises)

16. Why can’t SEC build generation?

Generation planning and procurement are handled by ODEC on behalf of SEC and other member cooperatives. Cooperatives pooling resources together to tackle their generation needs is the most effective approach financially and operationally.

17. Why can’t SEC postpone rate increases?

Delaying necessary rate changes would:

• Reduce reliability
• Defer critical improvements
• Lead to larger, more difficult increases later

Investing now protects long-term affordability and reliability.