Sioux Valley Energy electric rates will increase in 2026. The driving force behind those increases is higher wholesale power costs. More than 60% of every dollar paid to your electric cooperative goes towards paying for wholesale power and transmission…so when those costs go up, there is a significant impact on electric rates.
There are several reasons for the rising cost of wholesale power, but at the core the main driver is a need to build more electric generation and transmission facilities to support increasing demand from legacy members throughout the region. Legacy members are defined as current and future cooperative members that are traditionally categorized as residential, farm, general service, commercial, and industrial. As an example, Sioux Valley Energy is forecasting that both the number of members and its corresponding electric load will essentially double in the next 20 years. To put that in perspective, it took over 80 years to get to get to 30,000 members.
While hyperscale large loads such as data centers, crypto-mining, and AI, etc., are a hot topic across the nation, they are not behind the 2026 rate increase. In fact, if a large load were to locate within the Cooperative’s service territory, it would be required to pay its fair share of costs, insulating legacy members from the investment and ongoing expenses of serving electricity to these large projects.
The list below offers a closer look at rising wholesale power costs.
1. HIGHER DEMAND FOR ELECTRICITY
The electricity demand that our power suppliers are working to support is from “legacy” or “traditional” membership – residential, farm, general service, commercial, and industrial. To meet this need, Basin Electric Power Cooperative will invest approximately $11 billion in the next 10 years. The value of the electrical equipment needed by Basin to serve cooperative members is going to more than double over the next decade. This means Basin Electric will increase its electric generation by 50% and expand transmission mileage by more than 30%.
2. COMMODITY PRICE VARIABILITY
Dakota Gasification Company (DGC) is a for-profit subsidiary of Basin Electric; it owns and operates the Great Plains Synfuels Plant near Beulah, North Dakota. The Synfuels Plant gasifies lignite coal to produce valuable gases and liquids. It produces fertilizers, solvents, phenol, carbon dioxide, and other chemical products for sale. Commodity prices have been down in 2025 are expected to stay that way for some time, which impacts the demand for the inputs and products that DGC produces – suppressing profits.
3. THE NEED TO BUILD EXTRA GENERATION AND TRANSMISSION TO MEET HIGHER RESOURCE ADEQUACY REQUIREMENTS FOR THE SOUTHWEST POWER POOL (SPP)
That is a mouthful, but in essence, it means that Basin Electric is required to build or secure extra electric generation and transmission in case of an emergency. Think back to the unexpected winter outages in February of 2021. A lot of things went wrong…extreme cold that spread down to Texas along with generating plant outages at the same time. There simply wasn’t enough electricity being generated to meet the demand, which is why our system operators had to shut off power to some of our members. This is why many Regional Transmission Organizations (RTOs), like SPP, are requiring extra generation and transmission be built as a reserve (above and beyond what is needed for existing members and anticipated growth).
4. INVESTMENTS IN RELIABILITY
Basin Electric will need to make significant investments in existing facilities to make sure they can continue to generate electricity and have enough capacity in the system to serve today’s members along with expected growth.
5. DROUGHT ADDER BY THE WESTERN AREA POWER ADMINISTRATION
Dams and hydro-power facilities did not generate enough power due to drought, forcing the Western Area Power Administration (WAPA) to purchase power at higher costs to meet its contractual obligations. Thankfully, we anticipate that WAPA rates will stabilize in 2027.
To add to the rate pressures listed above, electric utilities across the country, including Sioux Valley Energy, have experienced significant cost hikes on operational expenses such as vehicles, bucket trucks, conductor (wire), poles, transformers, tools, equipment, labor, financing, etc. Each level of the cooperative system – generation, transmission, and distribution – are all dealing with those same increases. On the local level, Sioux Valley Energy is paying those higher operating expenses, which needs to be covered by the members through electric rates.