By Ken Schlimgen, General Manager
As you may be aware, electric cooperatives across the country, including Central Electric Cooperative, are facing significant financial pressures. During our recent district meetings, I expressed concerns about the likelihood of higher wholesale power prices in 2025, and unfortunately, this now seems inevitable.
As a member-owned cooperative, we have always been committed to managing costs while ensuring a safe and reliable supply of electricity for our members. The primary factor influencing our electric rates is the cost of wholesale power, which currently accounts for nearly 70% of our annual expenses. When these wholesale costs rise, the increase is too substantial for the cooperative to absorb, meaning it must be passed on to our membership.
Currently, about 83% of our wholesale power is supplied by Basin Electric Power Cooperative. To their credit, Basin Electric has maintained flat rates since 2017. However, to meet the growing demand for electricity, they need to make significant investments in new generation and transmission infrastructure over the next decade. Combined with rising labor, material and interest costs, this will lead to an expected increase of up to 10% in wholesale power costs from Basin Electric over the next two years. The remaining 17% of our power comes from the Western Area Power Administration (WAPA), which has announced plans to raise their rates by 14% over the same period.
Basin Electric and WAPA sell their power to East River Electric which then distributes it to us and other cooperatives. East River Electric will blend the new wholesale power costs with their own operational expenses to determine the final price that Central Electric will pay for electricity in 2025.
Like many other entities, Central Electric is also grappling with rising costs for labor and materials, as well as the need to replace aging infrastructure to maintain reliability. Recent data shows that materials for our industry now cost an average of 48% more than they did four years ago. To put this into perspective, we can only replace half a mile of power line today for the same cost as a full mile just a few years ago.
We are currently awaiting final figures from East River Electric regarding the wholesale power prices for 2025. Rest assured, we will work diligently to keep rate increases as minimal as possible as we finalize the 2025 budget. Our aim is to establish a rate that accurately reflects the cost of delivering electricity to our members, with just enough margin to satisfy our financial obligations.
We are committed to ensuring that rates are fair for all members, so everyone pays their fair share — no more, no less. The board of directors and management appreciate your understanding and support as we make these difficult decisions. If you have any questions or concerns, please contact us.
Until next month, stay safe.