The Cost of Reliable Service
In December 2023, United Electric announced member rates would increase due to the increasing costs of doing business as an electric cooperative. In an effort to continue providing affordable, reliable, and high-quality service to our member-owners, United Electric minimized the impact of the rate increase by implementing the required rates over 2 years. In January 2025, rates will increase by 5.67%. For an average household, that means an additional $8 a month.
This necessary increase is based on a comprehensive cost-of-service study performed in 2023 by a consulting firm with expertise in determining utility costs and allocation. The 2023 study was compared to another analysis by a separate and independent consultant that validated the amount of energy sales required to cover United Electric’s not-for-profit expenses.
Despite an economic environment of rising costs, United Electric makes every effort to keep energy affordable for its members. Increases to controllable expenses have been held to a minimum, and some expenses have been held constant due to effective planning and efficient delivery of service by UEC’s committed employees.
However, the most significant impact on United Electric is the cost of purchased power. This expense accounts for approximately 65% of the total cost of providing power to our members. This year alone, power purchase costs increased 15% from the previous year.
These power purchases primarily consist of the low costs associated with the Northwest hydropower system, but as the United Electric system grows, a larger portion consists of electric prices that are a function of market prices. In 2020, the Northwest regional peak power prices as reported by the U.S. Energy Information Administration averaged approximately $23.76 per megawatt-hour. After reaching an average price in 2022 of $92.81, current market-based prices are anticipated to be upward of 3 times higher than they were in 2020.
As a not-for-profit, member-owned cooperative, United Electric strives every day to hold down costs while providing the reliable, quality service our members expect. Rate increases are never taken lightly, and United Electric is committed to providing its members with energy that is safe and reliable, and priced among the lowest in the state and nation.
Sincerely,
Michael Darrington
General Manager