The Lake Country Power Board of Directors has approved the electric cooperative's budget for 2008 with a change in how it addresses rising wholesale power costs. The cooperative announced its base rate for general service energy will carry over into 2008, but it will add power cost increases through a wholesale power cost rider that will appear on monthly electric bills.
A wholesale power cost rider, also known as a power cost or resource adjustment, is used by electric utilities to account for the increasing cost of wholesale power. The rider is expected to add six-tenths of a cent (0.64 cents) per kilowatt-hour to members' bills next year.
For example, a co-op member using 1,000 kilowatt hours per month will see a $6.40 increase in monthly electric bills next year.
"The base rate for Lake Country Power's general service energy won't change," said Rick Lemonds, Lake Country Power's general manager. "But we will pass through increases in the cost of wholesale power, which means members will pay more for their electric usage.
"The cost of wholesale power has been rising for several years. For 2008, the wholesale power that Lake Country Power buys on behalf of members is projected to increase $3.3 million over 2007, and power costs are up 41 percent since 2001," he added.
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The co-op's power supplier, Great River Energy, is experiencing rapid growth, and the increasing costs reflect capital investments to meet growing energy needs. Among the factors cited for rising wholesale power costs in 2008:
- Fuel costs are rising and coal mining costs are going up.
- Great River Energy has invested more than $500 million in the last six years to build and operate peaking plants to handle additional summer electricity demand.
- GRE's largest coal plant will be shut down for an extended 70-day maintenance period this year. During that time, they'll be purchasing higher-priced replacement power from the open market.
Lemonds added that nearly 55 cents of every dollar paid by members is used to pay for wholesale power that the co-op buys on behalf of its consumers. It's by far the largest contributing cost factor to the cooperative's annual budget.
Other costs, such as removing trees and brush away from power lines, labor, fuel, materials and power line improvements will also increase in 2008. But Lemonds doesn't expect those costs to exceed Lake Country's growth next year.
"We're investing additional resources in our right of way tree-clearing program to improve reliability," said Lemonds. "And we continue to invest in capital improvements to meet member growth and maintain power quality by replacing aging equipment like poles, wires and transformers. We have also deferred several capital projects too, in order to operate within realistic and affordable means."
Co-op members can expect to see the addition of a wholesale power cost rider on their February bills. Participants in the cooperative's low-cost Energy Wise heating and cooling programs will also see an increase in rates for those programs.
