Reviewing your cooperative's financial health
Future planning is crucial to the success of your cooperative. A key part of future planning is looking at what it costs to provide electric service to our membership and where that money comes from.
Management and the Board of Directors, with assistance from our engineering firm, HDR, are completing an in-depth look at the financial health of your Cooperative.
We will review our revenue requirements, both historical figures and future predictions. In this process, we will determine how much operating revenue we need to collect to meet our operating expenses and financial goals such as debt service coverage, margins, plant additions and capital credit retirements.
Next, we will determine our cost of service. In this process, the cooperative’s expenses are equitably allocated to each of our rate classifications. This step tells us how much it costs the cooperative to serve each type of rate class, for example a farm and residential service versus a large commercial service.
The last step in the process is rate design. In this step, we determine how we fairly align costs and revenue collection within each of our rate classes. This tells us which rate classes may require a rate adjustment.
To maintain the quality, reliability and integrity of the services we provide and to meet the evolving needs of our membership, at times, it may be necessary for us to adjust our pricing structure. A potential rate increase is not something that management and your board of directors take lightly.
As we have shared over the last several years, the costs of operating the cooperative continue to rise. In addition, we have been informed of rate increases coming in 2025 and 2026 from both of our power suppliers, Basin Electric Power Cooperative and Western Area Power Administration (WAPA).
Please watch for announcements in our local pages of the North Dakota Living magazine, Facebook and on your billing statement over the next few months as we determine the amount of increase necessary. Be assured that BDEC will continue to be prudent with our members’ money.
Members with questions regarding the revenue requirements and cost of service study process are encouraged to contact our office or one of your area’s representatives on the Board of Directors.
Until next time,
Jerry King
General Manager