investing in our members
By Todd Brickhouse
For those of you who were able to join us in Bismarck for our 2024 Annual Meeting, thank you for attending – we are grateful for the time you invested to participate. Our Annual Meeting is invaluable as it allows us to reinvest in relationships and receive direct, in-person feedback
as we strive to better understand and meet the needs of those we serve.
One way Basin Electric measures its success as a G&T is the rate we charge our members. As your G&T, we recognize our value proposition to you is affordable rates, among other things, and the majority of your costs originate from Basin Electric. In 2023, Basin’s average
member rate per megawatt-hour was $60, which was the 13th lowest out of the 52 G&Ts who reported their statistics to the G&T Accounting and Finance Association. The average rate reported by all G&Ts was $74.54 per megawatt hour.
Early this year, we recognized a rate increase would be necessary in 2025. While we were able to communicate this to you at a number of your annual meetings and other venues, we finalized and quantified the rate impact over the summer with the completion of our financial forecast. We determined that a 5.7-mill rate increase would need to be implemented. You, our members, voiced support for utilizing the Rate Stability Fund in 2025 to gradually implement the rate increase over time, so a rate increase of $4 per megawatt-hour, or approximately 6.5%, will take effect Jan. 1, 2025, upon FERC approval.
Several factors are contributing to financial pressure in 2025 that necessitate a rate increase. I’d like to share some of the key drivers:
Load growth and investments in reliability
Investments in new generation and transmission facilities are needed to support member load growth, and it’s critical to invest in existing facilities to maintain reliability. To accommodate load growth, Basin Electric is investing almost $8 billion over the next 10 years in transmission and generation assets to ensure reliable electricity for our members.
Decreased surplus sales on the West side of the system
Market dynamics have been impacted by changes in the generating fleet, which has influenced prices and the ability to make surplus sales.
Impacts of inflation
Our industry is not immune to inflation. As a result, there have been cost increases for internal labor, contracted labor, materials, and maintenance, in addition to higher costs of borrowing money and increased insurance premiums.
Volatility of the power market
Changes in power generator types and increases in electric demand across all facets of life are creating more volatile power markets, resulting in high prices at certain times.
We know that a rate increase is unwelcome news. Team Basin understands the actions we take every day are felt by the member at the end of the line in their electricity bill. Having our members in mind is why we work so hard to find solutions to various challenges that periodically arise.
Please know that there are many ways the Basin Electric team is working hard to keep rates affordable for your cooperative:
Diversifying resources
The cooperative’s diverse generation fleet, alongside market purchases, is key to keeping rates affordable.
Basin Electric’s fleet of dispatchable generation resources is vital when people need electricity most, showing its value by helping insulate our members from volatility when market prices spike.
Rate Stability Fund
Basin Electric maintains a Rate Stability Fund in which revenue is deferred and added to the fund when financial results are strong. The fund acts as a cushion for Basin Electric’s membership to help avoid or slow rate increases. This can be beneficial when unanticipated weather events occur that have a significant financial impact.
Utilizing generation across the divide
The geographical location of Basin Electric means our member load and generators exist on both the West and East Interconnection. This helps Basin Electric utilize generation capacity from one interconnect and move it to the opposite to provide reliable and affordable power to our members.
Investing in our members
The growth Basin Electric’s membership is experiencing is a testament to the prudent management of the entire cooperative electrical system. To serve our members’ continued growth, Basin Electric is investing in current facilities and new facilities to maintain reliability, which is core to Basin Electric’s mission to provide reliable and affordable power.
Through hard work and prudent financial management, we have established a strong record of providing value to our members. From 2017 through 2023, Basin Electric retired $247.1 million in patronage credits and contributed a net increase of $335 million to its Rate Stability Fund. Additionally, Basin Electric provided bill credits to members in the amount of $30 million in 2021 and $115 million in 2022. Basin Electric will strive to continue providing value to members through affordable rates and other mechanisms as it has done historically.
