In the many years I’ve spent working at your cooperative, I’ve seen how quickly conditions in the electric industry can change—how quickly the storms can brew—and I recognize our rising costs as yet another on the horizon.

Over the next five years, our wholesale power costs are expected to increase by nearly 20 percent. Power cost is our largest expense, so even small increases matter greatly. With cost pressures already being felt today and more expected in the years to come, your board has been working diligently on a strategy to lessen their impact as responsibly as possible.

Instead of implementing a full rate increase, all at once, we’re taking a stairstep approach—steadily closing the gap between costs and revenue over time. This approach allows us to avoid sudden increases while giving members time to adjust. It’s a measured way for the cooperative to respond effectively to the challenges ahead.

Carefully managing capital credit retirements is a key part of this strategy. To maintain the cooperative’s financial equity, strengthening our financial position is critical. When it comes to capital credits, any amount returned must eventually be replaced, dollar for dollar. To ensure that, we must retain a larger portion of margins in the near term and return less in capital credits. Simply put, it doesn’t make sense to charge members more now, only to return that same money later, especially when it weakens our financial position in the process.

Some of the cost pressures we face are unique to rural electric cooperatives. One example is density—the number of meters per mile of line. In rural areas, it takes many more miles of line to serve fewer members, meaning the cost of building and maintaining the system is spread across a smaller number of meters. Fewer people sharing the same expense means each pays more.

Other factors also influence the cost of electricity, such as fuel prices, material and service costs and weather. Extremely hot summers and very cold winters can drive up power supply costs when demand for electricity is highest.

While many of these factors are outside of our control, one thing members can control is monthly energy use. The number of kilowatt-hours used each month directly affects your bill, and small decisions, such as thermostat settings, insulation improvements, water heater use and time chosen to run major appliances, can make a major difference in just a month’s time.

As we move forward together, your board remains committed to making thoughtful, steady decisions to protect both the reliability of our system and the long-term affordability of the electricity we provide. Just like fixing a roof before a storm arrives, preparing now will ensure our cooperative remains strong and able to serve our members when they need it most.

Cooperatively yours,
Dennis Mabe, CEO