Beginning Jan. 1, Southern Indiana Power members will see on average a 4% increase in their overall electric bills. The monthly bill for a member using 1,000 kilowatt-hours will be increasing about $5.70, or 4% higher than current charges.
The explanation for the increase is due to the rising costs of the fuels used to generate electricity. Our power supplier, Hoosier Energy, is dealing with these rising fuel prices and taking all measures available to them to mitigate the impact on Southern Indiana Power members.
Electricity must be generated or purchased. Generation requires a fuel source, primarily natural gas and coal. Coal prices are up nearly 300% since this time last year, and natural gas prices have increased more than 100% year-over-year. This has resulted in wholesale power prices increasing more than 175%. Natural gas, coal and power costs represent more than half of Hoosier Energy’s annual operating costs. With these dramatic increases in fuel prices, Hoosier Energy has no choice but to pass these costs on to their members and then subsequently Southern Indiana Power must do the same.
Even though your electric bill will be increasing approximately 4% this month, electricity remains a great value when compared to other forms of energy. I’m sure you are well aware that natural gas, propane and gasoline prices have all substantially increased over the past year.
Given that we are a local utility with employees and a member-elected board from your community, we share your interests and concerns. Because of our local focus, we strive to provide reasonable rates and excellent reliability and customer service compared to investor-owned utilities. Being a not-for-profit electric utility, when we need to make a rate change it is simply to cover costs of providing reliable service not to meet the needs of stockholders located throughout the world.
Factors in rising energy costs
Let’s review factors affecting energy cost increases in Indiana and across the USA.
• Rising demand: Economic growth in the U.S. and overseas has increased the demand for energy and the commodities used to generate electricity.
• Higher fuel costs: Fuels used to generate electricity, including natural gas and coal, have risen sharply in cost. Forecasts suggest fuel costs will stabilize in the future.
• Volatile wholesale market: Prices in the wholesale power market have increased substantially in recent months and continue to remain higher than even earlier this year.
Southern Indiana Power and Hoosier Energy have worked hard over the last several years to minimize volatility in your power costs. We continually take steps to improve efficiencies and manage costs associated with providing electricity to your homes and businesses. As always, the main objective of your electric cooperative is to deliver reliable electricity at a reasonable cost.