Manager Connection – Increases in Cost of Power

By Syd Briggs,
General Manager

Recently, our two major power providers announced expected increases to vary from 5.3% to 7.9%. As successful as Steele-Waseca is at reducing costs without reducing service … it is necessary to pass the increased cost on to our members in 2023.

As most of our members know, Steele-Waseca Cooperative Electric passes increases in the cost of power onto our members through the Wholesale Market Adjustment (WMA) on our legacy members and the Power Cost Adjustment (PCA) for our SMEC members who joined the co-op on July 31, 2015, following the closing sale of the former Alliant Energy service territory.

Fortunately, we have not had an increase to our rates for either factor since 2018. We have also not had an increase system wide in our rates for our service delivery expenses (cost of service) since 2013.

Recently, our two major power providers announced expected increases to vary from 5.3% to 7.9%. As successful as Steele-Waseca is at reducing costs without reducing service (we have been having excellent years with very low instances of outages), it is necessary to pass the increased cost on to our members in 2023.

This is the first budgeted increase to wholesale rates from Great River Energy (GRE), our main power supplier, in five years. Steele-Waseca and GRE are very fortunate to have gone this long with little or no increases to any of the components in our rates. The average increase to our rates system wide will be 4.1%.

In December 2022, the Steele-Waseca board of directors reviewed and approved the budget for 2023 with increases in the WMA for legacy members and increases in monthly fees for SMEC members to offset the expected increase in the cost of power. The increase in the WMA will go from $0.00581/kWh (kilowatt hour) to $0.01086/kWh. There will be a corresponding increase in the monthly fee of our SMEC members as we continue to move both our legacy and SMEC rates to a point where we can have just one set of rates system wide.

Your Steele-Waseca board of directors and employees have been working very hard year after year to minimize expenses without sacrificing service and the results have been excellent. Our expenses, other than the cost of power, have gone down each of the last three years, and the four-year average shows a reduction just under 4%. We were able to offset some of our last few years increases in cost of power with our operating efficiencies, however the current increase will take our cost of power since 2020 from 65.5% of revenue to 68.5% of revenue.

In review, the projected percentage increase is for the average member system wide. The increase each of you experience will be determined on whether your usage is over or under the average and the effect of the monthly fee.

It is important for our rates to collect as much of the actual costs as is applicable to each class of service. Most of our cost of service is collected in the energy charge, and we try to lessen that with a reasonable customer charge with as much balance as possible.

Steele-Waseca will continue to work hard to provide the best service and realize cost savings whenever possible. We also have an excellent section on our website, swce.coop, entitled, “Rebates and Programs,” that provide many ideas and links about efficiency and conservation.

The rate adjustments are not large ones, and it will take effect on your bill you receive in February. Please feel free to call any of our customer service representatives if you have a question or need further clarification.

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