Dear Members,

As I write this article, I’m trying to wrap up the final items on my Christmas list for my family. Earlier in the week, I sent my sister a text, asking what her son needed the most for Christmas. You have to know my sister and me; we are really close and always try to look out for each other. We occasionally go a little overboard for each other’s children. With this in mind, in less than five minutes she sent me six items of clothing that he “needed” for Christmas. I replied back that he was getting one item. I would not go overboard this year with our gift-giving. As I’m sure you’ve noticed, the cost of gift-giving, like so many other expenses, continues to rise.

One of those other expenses is the cost of eating out. I have a favorite lunch spot here in town that I try to visit a couple of times a week. The food is always great, and the staff is always friendly. I normally get a lunch special with water. Once you leave a tip, the bill is north of $10. Restaurants have also faced significant cost pressures, driven by rising expenses for goods, labor and other operational necessities. I’m not telling you this story to say that I plan on bringing my lunch every day, but only to say that not one business sector or household has been spared the impact of rising costs.

At Randolph EMC, we understand the impact that these cost pressures have on our members, and we are committed to balancing affordability, reliability and long-term sustainability.

Unfortunately, your cooperative is not exempt from this rising cost environment. As we approached the end of 2024, the sharp increase in wholesale power costs created significant challenges for Randolph Electric and the members we serve. Through November, wholesale power costs exceeded our budget by more than $1.2 million, with November alone seeing costs of over $826,000. This means power costs were almost 36% higher than the amount built into our rates. And December showed no signs of providing relief, with unseasonably mild weather further straining financial performance.

Wholesale power costs, which make up more than half of our total expenses, are influenced by several interconnected factors. In 2024, we saw higher system costs from our suppliers, compounded by necessary maintenance activities at key facilities, as well as increased reliance on natural gas. These rising costs outpaced our retail rates, challenging our goal of keeping a balance among competitive rates, system reliability and capital credits for members.

Adding to these challenges, the cooperative has faced ongoing cost pressures for materials and equipment essential for maintaining and improving our system. Supply chain disruptions have resulted in longer lead times and higher costs for critical components, requiring us to plan even further ahead with limited resources. These broader economic pressures, combined with increased wholesale power expenses, highlight the complex environment we are in.

As a cooperative, our commitment is to serve you and ensure the reliable delivery of electricity at the lowest possible cost. This commitment has guided our approach to utilizing the Wholesale Power Cost Adjustment (WPCA) as a tool for managing rising costs without implementing sudden rate increases. Since May 2024, the WPCA has gradually increased, moving from $1 per 1,000 kWh in May to $6 per 1,000 kWh in October. We will continue to adjust the WPCA as necessary in a strategically balanced manner to help smooth transitions and minimize the immediate impact on member bills.

Looking ahead, Randolph Electric is preparing to conduct a comprehensive Cost of Service and Rate Study. An independent rate consultant, Booth & Associates, will perform the study and evaluate the cooperative’s expenses, wholesale power cost projections and financial sustainability. The goal of the study is to ensure that rates remain fair and equitable while upholding REMC’s mission of providing reliable service.

At Randolph EMC, we understand the impact that these cost pressures have on our members, and we are committed to balancing affordability, reliability and long-term sustainability. As always, our focus remains on serving our members with transparency and remaining faithful to our commitment to the cooperative principles that guide us. Thank you for your understanding and support as we navigate these challenges together.

Cooperatively yours,
Dennis Mabe, Chief Executive Officer