New Year's Forecast: No Rate Increase

By Dan L. Brown

General Manager/CEO

I'm very pleased to announce we will ring in the New Year without a rate increase included in our 2013 budget.

The Cooperative's Board of Directors approved the budget in December, making 2013 our fourth year without a rate increase. This good news is something to celebrate, especially as many families and businesses continue to struggle economically.

This means I'm eating my own words after telling you at the Annual Meeting (August 10, 2012) we would likely face wholesale cost increases we could no longer absorb. But just last month we received good news from our power supplier.

It's true that wholesale power pricing strategies are changing in 2013, as our cooperative-owned suppliers work for equitable rate structures that balance demand (supply infrastructure) costs with consumption (energy use) costs. Our wholesale bills will be changing, but our overall cost projections appear to be stable for the coming year.

Key factors now affecting wholesale power costs include projected low-to-moderate natural gas prices, manageable rail transportation and coal prices, and a sluggish economy that has pulled many plans for power supply infrastructure expansion off the drafting table.

Many regulatory and environmental uncertainties remain which could alter our supplier's current long-range financial forecast. As recently as 2009, wholesale cost increases of 25% were projected for 2014. As it stands today, we hope a wholesale increase next year could remain in single digits, but we remain cautious.

Locally, we continue to find the silver lining in our smaller workforce, reduced by natural attrition, and in ongoing gains we've made to improve our internal operating efficiencies.

At an average residential energy rate of 8¢ per kilowatt-hour (kWh), our rates are among the lowest in Missouri and throughout the entire country (see chart). We must give credit to our cooperative-owned power suppliers for their roles in affording us these rates, because our wholesale power costs represent 70% of our entire budget.

However, we must also give well-deserved credit to our employees, who continue to strive for maximum efficiencies in our day-to-day operations.

We are grateful to be able to share this good news with you, and wish each of you a very happy new year!