If you attended this year’s Annual Meeting, you know that the Board and Employees of Missoula Electric Cooperative (MEC) have done an exceptional job at managing our local costs in recent years. As our auditor, Rick Matusiak reported, the cost we can control including operation, maintenance, administration and interest decreased again in 2016, and were below levels recorded in 2008. This effort has allowed our rates to remain relatively stable during those years.
During that same period however, Bonneville Power Administration (BPA) has implemented two significant power cost increases, with another planned for later this year. BPA’s wholesale energy and transmission charges now account for more than 46% of MECs annual operating expenses, and our 2017 budget includes approximately $3.2 million more in purchased power than in 2008. BPA’s rates are developed every two years through a formal rate-setting process involving utility customers and other stakeholders. The next wholesale increase is scheduled for later this year, with preliminary estimates ranging anywhere from 3 to more than 6 percent above todays levels.
According to BPA, the increase in wholesale rates stems from higher costs to operate and maintain the hydro system, higher long-term fish and wildlife costs, and upgrades to an aging transmission system. Ironically, an additional driver relates to lower prevailing energy prices. BPA frequently has surplus power to sell, and the revenue generated from these sales directly reduces the price we pay for power. Lower market prices mean less revenue in surplus sales which drives up the cost of power to preference customers like MEC.
MEC contracted with ECI Engineering in Billings earlier this year to update our cost of service study and determine the timing and impact of any rate adjustments necessary to keep pace with our rising wholesale energy costs. The final results of this study are in, and while the exact amount of the adjustment vary depending upon your rate class, monthly usage, and load characteristics, the study called for an average increase of 5.2%. This represents the first adjustment to our residential members since the spring of 2014.
Given this continued upward pressure on rates, it is more important than ever for members to utilize the energy efficiency programs available here at MEC. Whether your account is residential, commercial or agricultural, we probably have a program in place to help you save energy. If you have any questions or comments on the rate adjustment or energy efficiency incentives available please contact our office at 406-541-4433 or visit our website at www.missoulaelectric.com.