Electricity is a good value

March 2007

I’m glad three years have elapsed since I had to write a column such as this one. I wish it were longer.

Effective with our April billing period, we will be increasing our retail electric rates by about 5.3%. This will coincide and offset an increase we will pay for our wholesale power from Minnkota Power Cooperative. Our Wholesale Rate is in fact going up by 8.5% at the same time. Since our wholesale power bill makes up about two-thirds of our total operating expense, we can get by with a smaller percentage increase in our retail rate.

The good news today is exactly the same as the news I conveyed three years ago. That is, even though the cost of electricity from Nodak is going up, the increases have been minimal for several decades. If you adjust for the value of the dollar, you are paying considerably less for electricity today than 15 years ago. As an example, a rural residential account using 1,200 kilowatt-hours in a month in 1992 paid $94.80. With our new rate going into effect in April 2007, the same account will pay $103.50. That amounts to a 9.25% increase over 15 years. In contrast, the Consumer Price Index has increased by more than 40% during this same period of time.

We haven’t included a lot of detail about the new rates because the increase is pretty even across the board. That means, each rate class received the same increase, and in fact, each component of each rate class will be increased by roughly the same amount. For that reason, it doesn’t matter how much power you use or which rate class (residential, commercial, or industrial), your cost of power will go up by about 5.3% in April.

We don’t anticipate the need for any further rate changes at least for the next couple of years. In 2009, Minnkota will be phasing in the cost of expensive environmental upgrades on their power plants. We may incur additional wholesale increases at that time, which will again affect our retail rates. Hopefully, the adjustment at that time will again be minimal.

All of our retail rates are available on our website at www.nodakelectric.com. We invite you to visit our website for that information, along with much more about your electric cooperative.

We also invite you to attend your annual meeting at the Alerus Center in Grand Forks on Saturday, April 14, 2007.