Tim Thompson’s November 2022 CEO Column
THURSDAY, NOVEMBER 10, 2022
Inflation and Natural Gas Prices Drive the Need for Additional Revenue
With the rate of inflation and high cost of natural gas increasing Great River Energy (GRE) wholesale costs, we are anticipating the need to collect more revenue within the next 12 to 18 months. We anticipate an approximate 6% increase in GRE wholesale costs in 2023, which represents approximately $1,800,000. It is becoming clear that we will need to pass these higher wholesale costs onto the membership. Your board of directors is evaluating the situation to determine the best plan for generating the additional revenue that is anticipated, and such plan will likely lead to an increase in our general service rates. We do not like rate increases, but when they are necessary, we analyze and determine them in a manner to ensure that LREC can cover all its fixed costs. As mentioned in last month’s newsletter, there will be a Demand Side Management (DSM) rate increase effective January 2023.
Any such rate increases necessary to generate additional revenue needed would not be driven by LREC or caused by LREC, but rather they would be driven by natural gas price increases and inflation that hasn’t been seen for decades. The landscape affecting rates is changing very rapidly. By staying vigilant and staying on top of the massive changes impacting our world and industry right now, and upon receiving new information from GRE, our team has been planning, budgeting, and doing everything we can to mitigate the impact of potential rate increases.
Your board continues to move forward to reach decisions that are in the best interests of the cooperative. An absolute priority of ours is to make sure we keep this topic and related discussion on the table through newsletters, Facebook, and other forms of communication, so that we can be assured that we have done what we can to properly keep you informed of the decisions that will affect our rates and clearly explain the reasons supporting such decisions.
We have only had one general service rate increase in the last decade. LREC has been proactive in lessening the impacts of things outside of its control to maintain rate stability. This proactive approach remains strongly in place today, so that we may continue to plan in a manner that is in the best interests of our cooperative.
With energy prices, especially natural gas prices, expected to remain high in the near future and perhaps beyond, LREC’s load management programs can be utilized to help minimize the costs shown on the bill you receive each month. More than half of our members participate in at least one of the load management programs. These programs continue to add value for participants and our entire cooperative.
Rate and budget decisions can be very challenging. As always, our priority is doing everything we can so you receive safe, reliable, and affordable electricity. We will continue to keep you posted as we move forward.
