Electric Rate Design

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Tim McCarthy
Sioux Valley Energy 
General Manager/
Chief Executive Officer

We’ve been traveling throughout our service territory hosting “Brats and Kilowatts” demand informational sessions since August. We’re visiting all 10 districts to meet face-to-face with members discussing the billing changes coming in 2027. 

While we have determined that the new rate structure will include energy (kWh), basic service, and demand (kW) charges, the 2027 rates have not yet been set. We are analyzing several rate scenarios and are waiting for our wholesale power and transmission suppliers to provide their 2027 costs. Once those costs are known, the Cooperative will complete its rate and cost of-service studies. The results and proposed rates will then go to the Cooperative’s Board of Directors for review and approval in late fall. 

As we develop the new rates, our goal is to accurately reflect the Cooperative’s actual costs of providing service and ensure those costs are recovered fairly as wholesale power and transmission expenses continue to rise.

In addition to breaking demand out as a separate charge, members will see a rate increase in 2027, with additional increases possible in future years. The primary reason is the continued increase in wholesale power and transmission costs. 

More than 62% of what members pay for electricity goes directly toward these costs, making changes in wholesale rates a significant factor in members’ rates. 

Another factor is the Cooperative’s ongoing system replacement plan, which replaces approximately 125 miles of line each year. This investment has helped move Sioux Valley Energy’s reliability into the top quartile nationwide providing a level of service we believe our members expect and deserve. Maintaining that reliability requires continued investment in aging infrastructure, as well as rising costs for materials, fleet, equipment and other expenses associated with system replacement. We must also continue adding capacity to our local system so it can handle each member’s highest demand. 

As we develop rates that address these factors, we want to be sure that our rate recovery more closely matches how each member contributes costs to the system. It is about accurately reflecting how members use the electric system and then allocating those costs appropriately and fairly. 

As we close out the month, we’re entering a busy time for farmers as harvest gets into full swing. If you’re operating large machinery, be aware of your surroundings, including electrical equipment and overhead lines. And if you encounter a combine or other farm equipment on the road, slow down and give them plenty of room. Stay safe, everyone!

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