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Electricity remains a good value Electricity has fueled countless technological advances and consumers use it, either directly or indirectly, at almost all times. However, electricity is so abundant and affordable that it’s easy to take for granted. Recently, much has been made of the rising cost of electricity, now and in the future. While that is true, it’s important to understand that electricity remains an undeniable bargain, and one of life’s great conveniences. Power continues to be a bargain, especially when compared to other consumer goods.

Consider the cost of a gallon of gas 30 years ago compared to today’s price. How about a pound of coffee or a loaf of bread. The cost of electricity is only slightly higher than it was 30 years ago. While this doesn’t take the sting out of rising costs, it does show that the cost of electricity has remained relatively flat, despite its increased use and value to our daily lives.

Whether you consider yourself a bargain hunter or not, you are – perhaps unknowingly – taking advantage of one of the best deals around every time you plug in an electrical device. Sure, you pay your power bill each month, but do you know what you’re really getting?

For every $1 you spend on electricity, here’s how long you’re able to operate common household electronics:

Refrigerator: 1 week Ceiling fan: 30 days Lamp: 6 months

Cell phone: 1.5 years Air conditioner: 24 hours 40-inch LCD TV: 1 month

Sources: ENERGY STAR, U.S. Department of Energy, Natural Resource Defense Council, Manufacturers information.

Believe it or not, the national cost of electricity today when adjusted for inflation, is less than what it was in 1980. Very few commodities have remained such a good value. Compared to other consumer products and services, electricity is a bargain.

Costs are going up

Rising costs are an industry trend – and one that won’t be ending soon.

Electricity remains affordable and a good value, but there are forces driving up the cost of power – and they don’t appear to be slowing down. One of the primary reasons the cost of electricity began to rise is simply that there are more people, and each of them using more electronic devices – and more power – than they did years ago. To keep up with this trend, electric utilities increased investments in electrical infrastructure which ultimately ends up on consumers’ bills.

Utilities across the country are seeing increases in the cost of generating and transmitting electricity. In 2008, Great River Energy’s wholesale power bills to its electric cooperatives were, on average, 10 percent higher than expected. Our rates increased another 6.5 percent for 2009 and 2.3 percent in 2010. On a more positive note, Great River Energy’s rate increases are moderating. Approximately 60-70 percent of an average electric bill is made up of wholesale power costs.

What’s causing rate increases for Great River Energy?

• We’ve been in a building phase to add generation capacity and transmission to meet growing consumer demand and maintain reliability.
• A temporary decline in sales to our members, which means wholesale costs are spread among fewer units sold.
• Rising costs for the fuel needed to generate electricity.
• Complying with new regulations and requirements set by the state and federal government adds costs that affect our rate. These regulations include a renewable energy standard and additional environmental controls.
• A reduction in non-member revenue. Because most of the consumers our member cooperatives serve are residential customers, they primarily use electricity in the mornings, as they prepare for their day, and in the evenings when they return home for dinner and other activities. In past years, Great River Energy sold the additional power it produced in the middle of the day or night to the wholesale market. This was a tremendous benefit that significantly off-set the fixed costs of power plants and transmission facilities. In the current economic environment, there has been little need for surplus power in the market which means member cooperatives are now paying a larger share of the fixed costs of the power plants and transmission facilities.

We are holding the line on costs

Great River Energy took decisive action in 2008, 2009 and into 2010 to reduce costs and will continue to look for ways to save money.

• We stopped hiring in 2008 except for replacing business-critical positions.
• Capital spending has been reduced significantly by putting new projects on hold and only completing those already in progress.
• We significantly cut our general operating budget.
• We’re emphasizing our Energy Wise off-peak and energy efficiency efforts with our member cooperatives and working to move electricity usage to the most cost-effective times of the day and help consumers waste less energy.

Speak up for affordable power

As your elected officials consider legislation that could dramatically affect the cost of electricity, let them know what you think. Take a moment to join the movement that has already sent more than 450,000 messages to Congress.

Visit the Our Energy, Our Future website and ask your Congressional representatives three simple questions:

• How are you going to help meet the future demand for electricity?
• How will you aid in the development of technology to reduce carbon dioxide emissions?
• How are you going to help keep electricity affordable?

Begin a dialogue with your legislators: ask the tough questions.

Learn more at www.OurEnergyMN.coop »