Electric rates change over time as costs increase, member energy use changes, and the electric industry evolves. Beginning in 2027, Sioux Valley Energy will transition its residential and general service rates from a two-part rate structure to a three-part rate structure.
Today, residential and general service members pay for:
Beginning in 2027, electric bills will include:
Every electric utility is different, so rates are not designed exactly the same across the industry. However, all utilities must recover the costs of three basic things:
A three-part rate better reflects the actual costs of providing electricity. It also provides more stable revenue to maintain and improve the electric system.
When rates rely mostly on energy use, revenue can fluctuate due to weather, energy efficiency, or members generating their own power. However, many of the Cooperative’s costs – including charges from its power suppliers – are based on demand, not just energy consumption.
By including charges for demand, energy, and basic service, rates more accurately reflect the full cost of providing reliable electric service.
A demand charge also helps ensure costs are shared fairly. The electric system must be built to handle times when electricity use is at its highest. When many large appliances are used at the same time, demand increases and additional infrastructure may be needed. The need to build additional demand or capacity into the electric system is due to the increasing use of electricity by Sioux Valley Energy’s legacy members (residential, farm, small business, etc.) not hyperscale data centers.
Members who spread out their electricity use place less strain on the system and help reduce the need for costly upgrades. A demand charge helps assign those costs to the members who create them, helping keep rates fair for everyone.
Designing electric rates is a thorough and well-planned process. Sioux Valley Energy evaluates the actual cost of providing electric service and develops rates that are:
The Cooperative sets its rates after receiving updated power supply rates from its wholesale power providers, which happens in late summer. Once those costs are known, Sioux Valley Energy conducts rate studies to determine the cost of providing service. Any rate changes must be reviewed and approved by the Board of Directors before they take effect.