Updated November 1, 2024
What are the basics of Basin's Cost of Power Adjustment?
PRECorp is anticipating a wholesale power cost increase from our wholesale electric service provider Basin Electric Cooperative 6.5% beginning in 2025.
- The rate increase is a strategic move to address new generation investments, cost pressures, and regulatory compliance.
- It is not related to the distribution cooperatives' operational increases or exclusive support for renewables.
- Transparency, accountability, and long-term benefits are our primary focus to ensure sustainable and reliable energy for all members.
How and when are you notifying members?
We want to give as much notice as possible before the increase takes effect in 2025.
We have decided to share this information with our members even though it still needs approval and may change. This information was shared/discussed at our Commercial/Industrial Meeting held on July 31, 2024; and is being published in the WREN, Power Lines bill insert, and on the www.precorp.coop website.
How much will this affect my power bill?
PRECorp residential members using an average of 1,200 kilowatt hours (kWh) per month will see an average increase of $6 to $8 on their monthly bill starting in January 2025.
The member impact will vary due to the Cost of Power Adjustment (COPA) factor – the methodology is published in our tariff sheet.
The exact amount still needs to be calculated based on the over- or under-recovery of projected purchased power cost for the rate class or group by its sales.
Who can I talk to about this rate increase?
We encourage member feedback and engagement to address concerns and provide clarity, we are here to assist our members in understanding the impact of the wholesale power cost increase.
- Members can contact PRECorp’s staff for further information, or to estimate how the increase will impact them specifically - by phone at 1-800-442-3630 or by email at customerservice@precorp.coop
- Informational sessions and materials will be made available to help members understand the impact and benefits of these changes.
- PRECorp CEO Brian Mills will also answer questions during a live telephone town hall meeting on Thursday, November 21, at 6:30 p.m.
What are the next steps?
- PRECorp will file an application with the Wyoming Public Service Commission (WPSC) to establish a Cost of Power Adjusment (COPA) factor to be included in our Tariffs, which generally are effective in January of each calendar year.
- WPSC filings and case documents will be posted on the PRECorp website during this process.
Why is Basin increasing its rates now?
- Basin Electric Power Cooperative has not had a general rate increase since 2016, which was a rate increase of about 4.5%.
- The increase in wholesale power costs is mainly driven by investments in new generation, rising costs of materials and labor, and the cost to comply with new EPA regulations. See more details below.
Basin resources:
1. New Generation Investments
- Significant investments are being made in new power generation infrastructure to ensure reliable and sustainable energy supply.
- Over the next five years, Basin expects to invest as much as $4 billion, with the majority going into the construction of new generation and transmission. A couple of major projects are:
- 600 MW of natural gas-fueled generation near Williston, ND (under construction)
- Basin Electric is planning to construct a 1,400 MW natural gas generation facility in ND
- The new plant is expected to be operational by 2030,
- Will use about 7% of the natural gas currently produced in N.D
- Over the next five years, Basin expects to invest as much as $4 billion, with the majority going into the construction of new generation and transmission. A couple of major projects are:
2. Increasing demand for power
- In 2023, Basin Electric reported a new member peak demand of 5,174 MW, representing a year-over-year increase of 473 MW.
- In 2023, Basin Electric’s megawatt-hour sales (energy consumption) to members increased 7.5%, which is on top of 7.8% growth in 2022.
- A projected 3.2% growth in energy consumption annually over the next 10 years; Basin Electric’s next five to 10 years will be focused on investment.
- These investments are crucial for meeting future energy demands.
3. Rising Material and Labor Costs
- The cost of materials such as steel, copper, and other essential components has risen due to market conditions. This includes the increasing costs of fuels and production associated with existing generation units.
- Labor costs have also increased due to a competitive job market and the need for skilled workers to maintain and upgrade our infrastructure.
4. Impact of New EPA Regulations
- New regulations from the Environmental Protection Agency (EPA) require compliance measures that may incur additional costs.
- To meet regulatory requirements, utilities might need to invest in alternative energy sources or advanced emission control technologies for fossil fuel-based power plants. These capital investments can lead to increased costs that may be passed on to consumers.
What this rate increase is Not:
- It is not related to the operational increases of the cooperatives. PRECorp’s operational costs are managed separately and are not the cause of the wholesale power rate adjustments.
- The rate increase does not exclusively allocate funds to support renewable/green energy initiatives. While renewables are a component of Basin strategy, the rate adjustment covers a wider spectrum of investments and regulatory compliance requirements.
What is PRECorp doing to keep its costs in check?
Safety and reliability are our first priorities, which indirectly lower costs. PRECorp employees also look for opportunities to improve efficiency and reduce costs. Since 2016 there have been more than $5 million in cost savings or revenue enhancements to the bottom line. Through retirements and attrition, the total number of PRECorp employees is at 125, compared to 175 in 2001.
Is PRECorp doing anything to increase sales?
PRECorp operates in a certificated service territory, which means it is a fixed territory approved by the Wyoming Public Service Commission. However, PRECorp is supportive and involved in numerous community development activities and with groups focused on promoting growth here in northeast Wyoming as well as throughout the state.
As part of our cooperative outreach effort, PRECorp led the charge in the creation of Members 1st Power Cooperative. This is a three-member Generation & Transmission (G&T) cooperative that includes Fergus Electric Cooperative and Tongue River Electric Cooperative, both of Montana. The creation of the G&T helps manage our wholesale power supply costs in two primary ways: first, through the diversification of our loads, which reduces the wholesale peak power price from Basin Electric Cooperative; and second, by increasing our collective voices through guaranteeing a long-term seat on the Basin board.
Additional points to remember:
- PRECorp is focused on providing reliable electricity that is competitively priced.
- When necessary, PRECorp examines and updates its cost to serve power to all rate classes.
- We are always looking for new technologies, financial tools, efficiencies, and business opportunities that may control costs, and increase sales to help us keep our rates stable.