Lincoln Electric raising power rates
Lincoln Electric Cooperative will raise rates an average of 12 percent later this summer.
The increase comes as a result of increasing wholesale power costs, higher operating costs and larger debt service expense, cooperative manager Mike Henry said.
The cooperative has raised rates every other year since 2006, when power bills jumped 15 percent to offset the loss of Eureka’s Owens & Hurst lumber mill. In 2008 rates jumped another 12 percent.
Residential users, who are a vast majority of cooperative users, will see the biggest rate increase, at 15 percent. Their monthly basic charge will increase $5, from $20 to $25, and their energy charge increases from 5.38 cents per kilowatt-hour to 6.04 cents.
The average Lincoln Electric residential member who uses 1,350 kilowatt hours per month will see their monthly bill increase $13.91. The new rates are effective after the Aug. 20 meter readings, and will first appear on bills received around the first of October.
Other rate classes will see more modest rate increases, with small commercial accounts going up 7.4 percent, large commercial accounts up 4.9 percent, and irrigation and industrial accounts both up 5 percent.
The overwhelming driver of the increase is power supply costs, Henry said.
Starting Oct. 1, 2011, Lincoln Electric wholesale power costs will increase a minimum of 45 percent after the co-op starts buying power under a new contract with Bonneville Power Administration.
“Under the current 10-year contract co-op members have benefited from extremely low-cost wholesale power that will have saved members over $6.5 million over the life of the contract,” Henry said in a press release. “The co-op is now transitioning to much higher power costs.”
Under the new contract, the amount of still relatively low-cost BPA power will be capped, and future load growth will be met with even higher priced market-based rates.
“We’ve had a heck of a run the last 10 years,” Henry said, “but the reality is our power costs will soon mimic what most utilities in the region have been paying for years.”
The board’s intent is to have smaller rate increases over the next three years, rather than hitting the membership with an extremely large increase at any one time.
Other factors in the decision to increase rates are escalating operating costs such as taxes, insurance, vehicles, and labor, as well as materials and supplies. At the same time, debt service is increasing as Lincoln Electric borrows more money to complete needed system improvements to continue to supply reliable electricity for its members.
In the last two years the co-op has invested more than $2.5 million in system upgrades.
Lincoln Electric serves more than 3,900 members in a 1,125-square-mile area in Lincoln County and northwest Flathead County.