In the last edition of the Pioneer, I provided a brief update on our ongoing review of the Cooperative’s finances. Meeker Cooperative is feeling the full impact of rising inflation across all operations and investments. This extends from the cost of wholesale power and labor to transportation and equipment.

As we prepared for 2024, our budget forecasts indicated that additional revenue would be needed to maintain day-to-day operations and support crucial investments in the long-term reliability of our distribution system. To address these economic challenges, we launched a Cost of Service study in collaboration with an independent firm to analyze our revenue requirements and provide us with valuable insights to determine a rate adjustment that aligns with our cooperative’s financial goals and obligations.

The outcome of our Cost of Service Study confirmed a revenue shortfall of 3.7% and determined that a rate increase will be necessary this Spring. This decision is not taken lightly, and I want to emphasize that as a Co-op, we answer to you, our members, not investors or shareholders. We believe in transparency and accountability, which is why I want to explain how each dollar you spend on your monthly bill is used.

By far, our biggest expense is the cost of purchasing power. Accounting for 54 cents of each dollar, this is what it costs the Cooperative to buy the electricity itself from our wholesale power providers. Next up, at 9.1 cents, is our operations and maintenance expenses which cover the nitty-gritty of keeping the lights on – maintaining power lines, transformers, and other essential equipment. It’s like the upkeep cost that ensures a steady flow of electricity to your home.

Customer service comes in at 5.6 cents, this includes everything from meter reading and billing to addressing your inquiries. Administrative and general expense is the office side of things. this 7.7 cents covers salaries, office supplies, software, and the other general costs of running the show fit under this category.

Dollar Graph

Depreciation is a bit like setting aside money for the wear and tear on assets. It’s a non-cash expense, representing the gradual aging of equipment and infrastructure, accounting for 9.4 cents. Interest expense, 8.4 cents is the cost of borrowing money, and the tiny catch-all category of other expenses covers the miscellaneous costs that just don’t fit neatly into the main groups.

Finally, the operating margin at 5.7% is the portion of revenue remaining after the costs of goods sold and operating expenses. We are required by our lenders to maintain minimum margins, and this is also the portion of each dollar that is retained for reinvesting in our distribution system but assigned as capital credits to be returned to you, our members, in the future.

It’s extremely important to understand here, that of the total costs incurred by the Cooperative, we really only have control over about 15% of our spending. All other costs are external pressures.

As we look at the budget for 2024 and consider how to address the 3.7 cent per dollar shortfall identified by the Cost of Service Study, our first response is to do everything we can to control that 15%, but as you can see that will only get us so far. After careful consideration, the Board of Directors has approved an overall increase of 3.2% across all rate classes that will go into effect on April 1, 2024. Detailed information and a breakdown of this rate increase are currently in development and will be shared in the February digital and March printed editions of the Pioneer. We understand that these are economically difficult times for our communities and members. With that in mind, Board members reviewed and discussed various rate adjustment options and chose what they believe is the best plan that balances the impact on our members with the need to maintain our financial stability, ongoing operations, and the reliable service you depend on.

Skip to content