MANAGER’S MESSAGE: UNDERSTANDING YOUR ELECTRIC RATES

As your electric cooperative, our mission is simple: Serve our members, not outside shareholders, while balancing reliability, affordability and long-term sustainability.

One of the most important topics we evaluate is rates and how they affect our members. We are committed to keeping rates as low as possible while continuing to deliver safe, dependable service. This year, our cooperative experienced a rate increase driven primarily by rising wholesale power costs. We anticipate an additional wholesale rate increase in 2027 that is expected to put further pressure on our rates, likely necessitating another rate adjustment.

Several key factors are contributing to these higher costs.

• New generation and transmission: Basin Electric Power Cooperative, one of our wholesale providers, is investing more than $10 billion over the next 10 years to expand and maintain generation and transmission infrastructure. These investments are necessary to support growing demand and ensure long-term reliability. Additionally, the Western Area Power Administration (WAPA) is investing billions to modernize aging hydroelectric generation and transmission systems. While these upgrades come at a cost, they are essential to maintaining safe and reliable service for the future.

• Inflationary pressures: Like many industries, we face increased costs for labor, materials, contracted services and maintenance. Higher interest rates have also raised the cost of borrowing, adding to overall expenses.

• Market volatility: Power markets have become more unpredictable, with prices influenced by fluctuating natural gas markets, increased intermittent generation and rising electricity demand. Managing this volatility requires additional resources and planning.

We are also seeing impacts from new regional requirements to maintain higher reserve capacity margins, essentially a reliability “insurance policy” to help ensure power is available during unexpected outages or peak demand.

Despite these challenges, we are focused on controlling costs wherever possible. We partner with other cooperatives for bulk purchasing, share services through the Innovative Energy Alliance Cooperative and utilize specialized contractors and maintenance providers to improve efficiency and control expenses.

Strong financial management allows us to continue investing in infrastructure and managing risk while working to stabilize rates. Looking ahead, our management team and board of directors will carefully evaluate potential rate adjustments for 2027. Our recent cost-of-service study provides valuable guidance as we plan for the future.

We know these changes matter and we remain committed to transparency, thoughtful planning and responsible decision-making. Thank you for your continued support of your cooperative as we work together to provide reliable, affordable power for years to come.