Power Supply Rate Pressures

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Tim McCarthy
Sioux Valley Energy 
General Manager/
Chief Executive Officer

Electric utilities around the country and in this region are facing mounting rate pressures and Sioux Valley Energy is not immune to that. We are starting to get a clearer picture of what that could mean for our members this coming year, and we want to make sure to communicate that as early as possible.

As you can imagine there are a lot of factors that are considered when determining rates – but the most significant of those factors is power supply expenses. The reason power supply is a driving factor of your electric rates is because over 60 percent of Sioux Valley Energy’s costs go towards paying for power. Our wholesale power supplier, Basin Electric, has announced a substantial increase for the coming year. We are working closely with their staff to minimize the increase as much as possible and should know its full extent soon. In addition, the Western Area Power Administration (WAPA) has announced a nearly 14 percent rate increase over two years. Approximately 17 percent of our power supply is made up of our WAPA allocation.

When Sioux Valley Energy receives a rate increase from its power suppliers, it is passed directly through to members which unfortunately means any increase we see will be reflected on our members’ bills.

Other factors that will continue to impact rates this coming year and in future years include the inflationary increases in distribution costs reflected in our materials, equipment, and labor as well as our financing costs. Higher interest rates continue to drive up the cost to borrow money to complete necessary ongoing infrastructure upgrades to our distribution system.

We are working on the 2025 budget and workplan and will do what we can to hold down distribution costs as much as
possible, but there is no way around the increase in power supply costs. Members need to be prepared for rate increases in the coming years. We will be working on nailing down the rate impact to members as quickly as we can and hope to have that information to you in the next couple of months. Our pledge will be to work towards minimizing the impact and we will keep you informed as the rate forecast evolves.

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