For the first time in six years the Lake Country Power Board of Directors has approved a general service increase to address a $5.6 million revenue shortfall. The adjustment is necessary to meet rising costs, but members won’t see a change on their electric bills until April.
The necessary rate change is largely due to changing economic demands that evolved early in the COVID-19 pandemic. In the past 18 months, material costs have soared more than 30 percent and outside contractor labor has increased more than 10 percent.
“In order to maintain our high level of providing safe and reliable electric service, we have no choice but to deal with rising inflation, which is affecting so many businesses including the power industry,” said Mark Bakk, LCP general manager. “We have successfully been able to keep rates flat for several years, but we are simply out of options.”
In addition to increased material costs, LCP is dealing with longer-than-normal lead times for items like transformers, meter bases, vehicles and other essential equipment. Some orders that typically required 4-6 weeks for delivery now range between 30-100 weeks.
“The supply issue has us feeling like we’re one big storm away from failure,” says LCP Chief Operating Officer Derek Howe. “Those utilities who order as needed are running a huge risk of no longer being essential service providers. We are in a business that needs to keep moving and we are doing all we can to meet that expectation.”
The increase calls for an added 1.67 cents per kilowatt-hour (kWh) to the general service residential and small commercial rates. For the average co-op member consuming 600 – 1,000 kWh per month, this will result in payments rising about $10 – $16, depending on energy usage.
“We are keenly aware that any rate increase will have an impact on our members,” says Tracy Peterson Wirtanen, LCP chief financial officer. “As a cooperative, we make every effort to keep our member owners front of mind, especially when making difficult decisions.”
“Despite the unfortunate need to raise rates, we are proud that we haven't needed a general service increase in the past six years,” said LCP Board President Craig Olson. “And, we have managed to keep it lower than our cost-of-service study suggested as we see utilities around us proposing steeper increases.”