Working together, we can overcome today’s energy challenges

Donna Walker

By Donna Walker

As Hoosiers continue to experience rising electricity bills, it is important for you to know the factors driving these cost increases and what can be expected moving forward. You should also know Hoosier Energy and your local electric co-op are doing everything possible to minimize the impact to consumers. 

Over the past several months, economic outlooks changed dramatically, both domestically and globally. Year-over-year, inflation is up over 8%. Gasoline prices have increased almost 45% and are at record highs. Food prices are up more than 10%. 

The labor market, which is historically tight, creates additional pressure in these areas.  

Global supply chains were just starting to get sorted out following COVID disruptions but are now facing new uncertainty around the impacts of new lockdowns in China and Russia’s invasion of Ukraine. 

Russia is a major supplier of natural gas to Europe, and European demand for liquified natural gas (LNG) from the U.S. has risen dramatically in the wake of Russia’s invasion. At the same time, U.S. natural gas producers are conservatively ramping back up production following years of low prices. 

Hoosier Energy is the not-for-profit generation and transmission (G&T) cooperative providing electric power and services to your local co-op and 17 other member-distribution cooperatives in central and southern Indiana and southeastern Illinois. 

We are not immune to this challenging combination of rising costs, labor shortages and supply chain issues. Natural gas, coal and power costs represent more than half of our annual operating costs. Those costs have increased approximately 150% year-over-year and are continuing to rise.

The current challenges follow a national trend over the past several years of retiring coal generation and transitioning to more intermittent, renewable resources. To date, the pace of additions has not kept up with retirements of resources they will replace. 

This means available generation reserves for unexpected grid events are not as large as they once were. This increases the possibility for our regional grid operator to call for more frequent reductions in demand to preserve operational integrity and reduce the risk of prolonged, widespread power outages.

We expect this challenging environment, including higher electricity prices, to continue over the next few years. Hoosier Energy is constantly looking for opportunities to reduce costs and minimize the impact of rising energy prices and supply chain issues. We are also working with your local co-op and other member systems to find ways to soothe the impact whenever possible.

Electric cooperatives have faced significant challenges in the past, including the 1970s energy crisis and 2008 Great Recession. Working together, we overcame these challenges, and we will do so again. 

DONNA WALKER is president and CEO of Hoosier Energy, a generation and transmission cooperative based in Bloomington, Indiana.

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