Beginning Jan. 1, Southern Indiana Power members will see on average a 3% increase in their overall electric bills. This increase will show up on the bill you receive in February as a power cost tracker per kwh purchase. The monthly bill for a member using 1,000 kilowatt hours will be about $3.17 or 2.5% higher than current charges.
The explanation for the increase is really two-fold. We are seeing increases in costs from both the wholesale and distribution side of the business. On the wholesale side, our power supplier, Hoosier Energy, is dealing with higher power market prices caused by a recent coal supply shortage and surging natural gas prices. On the distribution side, we are seeing major increases in material costs for poles (20%), transformers (43%), conduit (440%), and fuel (40%). Yes, that is not a typo: That’s a 440% increase in conduit prices.
Even with the increase, electricity remains a great value when compared to other forms of energy. I’m sure you are all 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. We strive to provide reasonable rates, 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 service, not to meet the needs of stakeholders located throughout the world.
Factors in rising energy costs
Let’s review factors effecting energy cost increases in Indiana and across the country:
- 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.
- Material and equipment costs: The cost of materials, including transformers, poles, wire and other equipment necessary to provide electric services has experienced double digit increases this year.
- Volatile wholesale market: Prices in the wholesale power market have increased substantially in recent months and continue to remain higher than even earlier forecasted.
Southern Indiana Power has worked hard over the last several years to minimize volatility in your power costs. In fact, our most recent independent audit revealed that our costs to members has increased only 20 cents per month over the past 10 years, a statistic we are very proud of.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.