2024 Power Rate Update
The rise in electricity prices is a nationwide conversation amongst electric cooperatives and other utility suppliers as power supply costs continue to rise. I touched on this at the 2023 Fall Festival events, but I want to expand on this critical topic.
Every two years, MEC’s power provider, Bonneville Power Administration (BPA), conducts a rate case to determine wholesale rates for the coming two-year period. This involves a formal rate-setting process involving utility customers, like MEC, and other stakeholders. BPA’s wholesale power contract encompasses tiered rates. Tier 1 rates make up the bulk of our power supply, are generally stable, and are tied to the operation of BPA’s low-cost generation sources, primarily hydropower. Historically, the amount of Tier 1 power supplied by BPA was sufficient to meet 100% of MEC’s power supply needs.
However, as our loads continue to grow, the excess power we need is supplied through a product called Tier 2. Tier 2 rates are market-based and can fluctuate with the power price on the open market. Unfortunately, the amount of Tier 2 power we need to supply our members has nearly doubled since our last rate period, as has the price. BPA’s wholesale energy and transmission charges account for over half of the Co-op’s annual operating expenses. Our 2024 budget will include approximately $3.0 million more in purchased power than just one year ago, driven primarily by the increase in Tier 2.
A not-for-profit electric cooperative, Missoula Electric Cooperative is owned by the members it serves. That means that operating efficiency and rate transparency are critical and taken very seriously by leadership and our board of trustees. MEC’s management team has worked closely with its rate consultant to determine the timing and amount of rate adjustments necessary to meet this rising cost of wholesale power. Beginning on January 1, 2024, a rate increase of approximately 5% across all rate classes will be reflected on MEC billing statements. This power cost adjustment will be reflected on January billing statements, which members can expect in early February.
You may recall that in June of 2022, the Cooperative restructured its residential rates by reducing the energy charge and implementing a peak charge. This separation of peak and energy allowed the Co-op to assign costs more accurately within the residential class while at the same time allowing every member to manage their overall bill by reducing peak consumption. The new rates will continue this transition by reducing the energy charge and placing slightly more emphasis on the peak charge when power is most expensive.
As a member-owned cooperative, your priorities are our priorities. As your trusted energy provider, we know that saving energy and money is important, and we have several programs to help. The Cooperative offers a robust rebate program, provides online resources to help manage your energy consumption and reduce your peak load, and schedules complimentary energy assessments. For specific energy efficiency questions or to schedule an energy assessment email our Energy Services Manager Dan Rogers, at DanR@meccoop.com.
MEC has proudly served its members for 88 years, and we look forward to serving you in 2024. Please contact me with any questions, concerns or feedback on the rate change or other Cooperative business. You can email me at MarkH@meccoop.com or call my office at 406.541.6340.
