As a member-owned electric cooperative, we at K.C. Electric Association understand that any change to electric rates is important to our members. We also recognize that members deserve to know why rates are changing, how those decisions are made, and how the cooperative is working to keep costs as manageable as possible.
In 2027, our cooperative will adjust retail electric rates in response to an increase in wholesale power costs from our power supplier, Tri-State Generation and Transmission Association. At the same time, we are taking a comprehensive look at how the costs of providing electric service are allocated among our different member rate classes.
A CLOSER LOOK AT OUR COSTS
Wholesale power is our largest annual expense, typically accounting for approximately 74% of our total expenses. When the cost of the power we purchase increases, it puts pressure on the rates we charge our members.
Tri-State recently announced a 7.8% increase in wholesale power costs for 2027. We have limited control over the price we pay for wholesale electricity, but we do have a responsibility to carefully evaluate how those costs, along with the costs of operating and maintaining our electric system, are recovered through member rates.
We don’t believe a one-size-fits-all approach is appropriate when setting rates. Different member classes use electricity differently and place different demands on our electric system.
INDEPENDENT COST-OF-SERVICE STUDY
To help ensure our rates are fair, equitable, and based on the actual costs of serving our members, we hired an independent rate consultant earlier this year to conduct a cost-of-service study.
The study examines the costs associated with providing electric service and determines how those costs should be allocated among our various rate classes. This includes evaluating factors such as energy consumption, demand, customer-related costs, and other characteristics associated with serving each class.
The goal is straightforward: Each rate class should contribute its appropriate share of the costs required to provide electric service.
An independent consultant provides an objective analysis of our costs and rate structure. This gives the cooperative and our members additional confidence that rate decisions are based on sound financial and industry principles rather than on simply applying the same percentage increase across every rate class.
WHAT DOES THIS MEAN FOR MEMBERS?
The 7.8% increase from our wholesale power supplier does not necessarily mean that every member’s retail electric rate or monthly bill will increase by 7.8%.
The results of the cost-of-service study will help determine how the costs of providing service should be recovered across our different rate classes. As a result, the impact of the 2027 rate changes may vary by type of service and rate class.
Your individual bill will also continue to be influenced by how much electricity you use, when you use it, and other factors specific to your account.
WE TAKE RATE INCREASES SERIOUSLY
We know that electricity is an essential service and that our members are facing rising costs in many areas of their household and business budgets. We do not take a rate increase lightly.
At the same time, our cooperative has a responsibility to remain financially sound and maintain a reliable electric system. We must have sufficient revenue to purchase wholesale power, maintain and improve our distribution system, respond to outages, meet changing system needs, and make the investments necessary to serve our members today and in the future.
Our goal is not simply to raise rates. Our goal is to establish rates that accurately reflect the cost of providing reliable electric service while treating all member classes fairly.
KEEPING MEMBERS INFORMED
As the cost-of-service study progresses, we will continue to communicate with you about the process and its recommendations. We will explain what the study means for each rate class and provide information about the proposed 2027 rates before they take effect.
We acknowledge that rate changes can be difficult, and we are committed to being transparent about why changes are necessary and how they are developed.
Your cooperative belongs to you — our members. We are committed to making responsible, informed decisions that support reliable electric service, financial stability, and fair rates for all members.
Thank you for your continued membership and support as we work together to ensure a strong electric cooperative for years to come.
By David Churchwell, General Manager
