A message from the General Manager:

I am often asked about what impacts electricity prices. While there is no short answer, there are a few key elements that impact electricity prices and rates. Some of these factors KEC can manage. Other factors are quite difficult, if not impossible, for us to control. 

Over the past couple of years, we have all experienced how the cost of living seems to have increased across the board. Just as inflation has impacted everything from the price of gasoline to the price of eggs, costs for KEC to purchase and distribute electricity also continued to rise. 

For example, the cost of electrical equipment the cooperative purchases to provide our members power has more than doubled in recent 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. 

Additionally, utilities rely on long term debt to fund their operations and spread the cost of purchasing materials out over their useful life. While this helps smooth our rates over time, rising interest rates have increased our cost of borrowing and, in turn, the cost of doing business. 

Finally, as I’ve shared with you before, 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 the cost of power we purchase from the federal dams. This is no longer the case. Bluntly put, the cost of power in the Pacific Northwest is being driven up by environmental policies being adopted by and enforced in neighboring states. At the same time, increasing demand resulting from the electrification of everything is increasing scarcity of supply. Those policies have significantly altered the supply and demand of energy resources and have increased our costs of obtaining power from the market by nearly two and a half fold. Unfortunately, and frustratingly, our ability to control this is very limited in the short to mid-term. In the long-term, KEC is actively exploring alternatives intended to safeguard its members from these costs. More on those efforts will be shared in future editions of this newsletter. 

As a not-for-profit cooperative, all of our expenses must be recovered through rates. Covering the incremental expenses we have experienced this past year requires we increase the Power Cost Adjustment (PCA) portion of our rates—resulting in an overall increase of 5.9 percent effective with January 2024 billings. The PCA will change from $0.01801 to $0.02494 per kWh and the average residential member’s monthly bill will increase by approximately $7.28. Visit our Residential Bill Calculator for a rate calculator that can show you how this change may affect your bill.

I hope this information sheds light on some of the factors that impact electricity prices. While we can’t control power supply markets or interest rates, please know KEC is doing everything possible to keep internal costs down. We’re here to help you, too. Contact us if you have questions at 208.765.1200.

Doug Elliott
KEC General Manager & CEO