Growth and Designing Rates

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Tim McCarthy
Sioux Valley Energy 
General Manager/
Chief Executive Officer

Sioux Valley Energy’s membership is growing and we expect that growth to continue for years to come. In fact, we are forecasting that our membership and corresponding electric demand will nearly double over the next 25 years. To be clear— this is what we would consider traditional growth like residential dwellings, farms, and commercial facilities. And while we certainly have had inquiries, this forecast does NOT include any potential super  load electric users such as data centers or AI facilities you are hearing so much about through various news mediums. Any loads of that nature would be served with generation beyond that of our legacy membership requirements.

Sioux Valley Energy is not alone in this growth. The Cooperative’s wholesale bulk power supplier, Basin Electric Power Cooperative, is seeing that same high demand for electricity throughout its entire nine-state region.

To keep up with this demand and continue to provide reliable wholesale power to cooperatives like Sioux Valley Energy, Basin Electric will invest between $11 and $12 billion in electric generation and transmission projects over the next 10 years. To support this investment, Sioux Valley Energy will pay 11% more for wholesale power and transmission in 2026. We are working at the local level to get that number down to approximately 9% as an overall average for our members. Over 60% of your electric bill goes towards paying for wholesale power and the transmission of that energy. It’s the number one factor that has an impact on your electric rates. In other words, when wholesale power and transmission costs go up, those costs are passed on to you and are reflected in your electric bill through the rates you pay.

There are countless ways to design electric rates.   Sioux Valley Energy’s rate design philosophy incorporates several objectives. Top objectives include making sure rates recover costs and are financially adequate; ensuring that those rates are fair and equitable; and establishing rates that reflect cost causation meaning costs are paid by the members who are responsible for incurring them.

Because the 2026 rate adjustment is primarily driven by higher wholesale power and transmission costs, the increase will be applied as a direct pass through to the membership. This means for residential, rural residential, and general service rate classes, the increase will only affect the energy component or kilowatt hour charge on your electric bill.

Check out our Electricity 101 article to learn about the various rate components and explore how electric rates are designed.

We are planning to host an online rate webinar on the evening of Tuesday, December 16.

Click for more information on the rate webinar.

If you can’t take part in the online event, we will also be discussing the rate adjustment at our upcoming District Meetings.

 

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