Manager Message: Understanding your electric cooperative rates

One topic that frequents the boardroom is rates and the impact those rates have on our membership. At KEM Electric Cooperative, we are dedicated to keeping rates affordable while at the same time ensuring reliable service for all of our members. Through strategic investments in infrastructure and technology, we aim to enhance our efficiency and minimize costs, ultimately benefiting you, our valued members.

As a cooperative, we prioritize transparency in how your rates are set – ultimately ensuring that you – our member – understand the factors which contribute to the cost of your services. 

There are several factors that impact our rates from the members per mile of line to our market conditions. This year, our cooperative saw an increase in our rates – primarily from the cost of wholesale energy. 

The increase costs breakdown can be attributed to: 

New generation and transmission

Basin Electric Power Cooperative – one of our wholesale providers – noted that investments in new generation and transmission facilities are needed to support member load growth, and it’s critical to invest in existing facilities to maintain reliability. To accommodate these large loads, Basin Electric is

investing over $12 billion over the next ten years in transmission and generation assets to ensure reliable electricity for our members.

Inflation costs

Cost increases for internal labor, contracted labor, materials, and maintenance, in addition to higher costs of borrowing money (higher interest rates) are attributable to rising costs. 

Volatility of power markets

Power markets have become more volatile, resulting in dramatic price movements. Increasing intermittent generation, swings in natural gas prices and increasing electricity demand are primary contributors to volatility. While Basin Electric manages through generation and hedging, the cost of this is increasing.

We know that we will have higher wholesale rates from both Basin Electric and Western Area Power Administration, but as your cooperative, we continue to look for ways to maintain our reliability as a cooperative while ensuring affordable rates for the services we provide to our members. 

We are dedicated to keeping rates affordable while ensuring reliable service for all of our members. Thank you for your ongoing support of our cooperative. Together, we can navigate the complexities of energy costs and continue to provide you with the reliable service you deserve.