At KEC, we know our members put a lot of trust in us to be responsible with their money. We keep this in mind every day in our work as we live our mission of providing members exceptional service and dependable electric power at competitive rates. The same is true when we determine rates for the electric service our members depend on. As a not-for-profit cooperative we do everything we can to keep our costs low and we never charge more than is needed to maintain and operate our electric system responsibly. Revenues remaining after paying incurred expenses are returned to members in the form of capital credits.

That being said, the last few years have been a challenge for all of us. The pandemic, disruptions in the supply chain, rising costs due to soaring inflation and labor shortages have increased the cost of living and doing business. We know this is true for those we serve, and it is certainly true for KEC. 

For example, the cost of electrical equipment the cooperative purchases to provide our members power has more than doubled over the past two years. These materials have also been in scarce supply. In fact, most manufacturers no longer guarantee shipping dates or final pricing. As a result, electric utilities face uncertain pricing for materials that must be ordered months, and in some cases years, in advance of their delivery. To fund their operations, utilities rely on long term debt to help spread the cost of purchasing these materials out over their useful life. While this helps smooth our rates over time, the Federal Reserve’s recent efforts to control inflation have resulted in rising interest rates. This has increased our cost of borrowing and, in turn, the cost of doing business. 

However, as we have recently shared, the most notable increase in our cost of doing business is due to the purchase and production of the power our members require. The cost of power represents our single largest cost of doing business. In fact, 42 percent of all revenues produced by our rates is used to purchase power. About 70 percent of that power comes from the federal dams. While that power is clean, renewable and inexpensive, it is also in high demand and short supply. The other 30 percent of the power we purchase must be generated from other resources. 

Historically, we have been able to purchase that additional power from the market at prices comparable to federal power. This is no longer the case. Myriad pressures affecting the power supply markets have increased market prices by three-fold.

These inflationary and power cost pressures are largely and unfortunately beyond our direct control. Covering those costs requires we increase the Power Cost Adjustment (PCA) portion of our rates—resulting in an overall increase of 6.9 percent effective with January 2023 billings. As a result, the average residential member’s monthly bill will increase by approximately $7.85. 

We regret this necessity. As a KEC member, you can trust that when we adjust rates, we will only do so with a good reason—to cover the key components essential to keeping power flowing to our members across North Idaho. Remember that your cooperative will always keep safety, reliability and affordability at the forefront of all we do.