Throughout late winter and early spring, thousands of Sioux Valley Energy members attend one of our 10 district meetings. As part of the program, both your local director and I present information about what is happening at the Cooperative. We understand that not everyone can attend one of the meetings, so I thought I would give you a high level overview of what we discussed.

As many of you know, the Sioux Valley Energy Board of Directors approved a rate increase to the membership beginning in January.

The Cooperative’s operating budget will reach nearly $115 million this year. The biggest part of the budget is power supply costs—paying around $70 million for purchased power in 2025, which is $4.3 million higher than last year. Power supply makes up over 60 percent of the budget. Our power supply costs increased by over seven percent--which is the driver of the recently implemented rate adjustment. We were able to mitigate that increase to an overall 4.9 percent through several measures we took locally.

First, we considered our direct expenses, which only make up six percent of the budget. These costs include day-to-day activities such as cable locating, right-of-way clearing, pole testing, consumer billing and postage, member meetings, community development, software, director expenses, building expenses, dues, and outside services. We have budgeted a reduction for direct costs in 2025.

Second, we are planning to use $2.9 million in deferred revenue, which also helps lessen the need for a more significant increase.

One consideration when looking at rates is our indirect expenses, which make up about 17 percent of the budget. This part of the budget reflects additional investments in distribution and general plant, along with interest and depreciation. Last year we did reduce the number of miles of line that was constructed, however, that line replacement schedule is not sustainable if we want to maintain reliability in the future. We decided that it was not in the Co-op’s best interest to reduce this part of the budget and plan to continue our aggressive work plan--replacing 125 miles of aging line this year. 

Sioux Valley Energy is budgeting to sell more than 960 million kilowatt-hours in 2025– it won’t be long before we hit the milestone of one billion kilowatt-hours. We are estimating that our members will increase their kilowatt-hour use per year by another 500 million in less than 15 years.  Those numbers make it clear that the demand for electricity is rapidly increasing amongst our membership, and we must be ready.

So how does this increased demand impact you? Well, it means that our wholesale power supplier, Basin Electric, needs to build more generation and transmission at the cost of $12 billion.

Electric system investment is not limited to the wholesale power supply level. There are significant investments being made in the transmission and distribution system as well.

The numbers are staggering if you look at the planned 10-year investments for just Sioux Valley Energy members. To support the future load growth of our individual cooperative, approximately $440 million will be invested at the generation, transmission, and distribution levels to support just Sioux Valley members. Let that sink in for a moment…that’s nearly half a billion dollars. Those numbers add up to an additional $15,000 invested for each Sioux Valley member on top of the nearly $18,000 that is already invested per member!

While it is a heavy lift, we are ready for the challenge and are making long-term plans to meet member demand for electricity. The well-planned investments I just mentioned will help us get to where we need to be in the future, which maintains a system that currently delivers 99.989 percent reliability for our members.

If you would like to watch the full district meeting program which will provide you with a lot more detailed information, go to siouxvalleyenergy.com.