Download Why Rates are Rising - Northern Municipal Power Agency

Why Rates are Rising
Wholesale power costs primary reason for increased rates
What
Cost
Reason
Result
Wind power
(31% of retail
energy sales on
average)
$66 million
MN passed law requiring 25%
power from renewable by
2025.
The goal has been met sooner than later to hopefully save
members’ money long term via favorable contracts. Wind
power is variable, helping at times with load control but not
reliable. However, investment is expensive and wholesale
power market is depressed causing rates to rise.
Power plant
environmental
controls
$422 million
Emissions at power plants are lower, but technology is
expensive. However, doing so has helped secure this baseload,
reliable electricity for the foreseeable future.
Transmission
line
$300 million
Wholesale
power market
and consumer
demand
An estimated
shortfall of
$20 million for
2010 for the
Joint System.
Required by the federal
government to use “available
control technology” for
reducing certain emissions.
Needed to delivery electricity
to consumers in a reliable
manner and a cause-effect of
adding the required wind.
The wholesale markets are
down due to the lingering
effects of the recession.
Consumers are also using less
energy across the region.
Why are rates rising? The answer is both simple
and complex.
Simply put, the rates you pay for electricity are
rising primarily due to increasing wholesale power
costs and to a lesser extent reduced retail sales.
However, a look behind the scenes shows complex
factors such as state laws, environmental mandates,
the need for a new transmission line, and a
depressed power market are causing these steep
increases in the price of power, the municipal utility
receives from the Northern Municipal Power
Agency.
In turn, these increases are causing your utility rates
to rise as well because, more than
cents of every
dollar a customer pays on his/her electric bill goes
to wholesale power costs.
While these increases bring added pressure on the
pocketbook, there are positives on the horizon.
Your utility now receives enough renewable energy
to meet Minnesota law at prices more favorable
than the current cost for building new wind farms.
Over time, that could help stabilize future rates.
According to NMPA, the future power supply needs
of this region have also been met through 2030
barring anything unforeseen. NMPA also projects
the prospect of an upcoming period of wholesale
rate stability after the year 2013.
What we are doing to hold the line on expenses
1. Offering programs designed to help customers
manage and lower energy costs.
2. (Add your Own)
Another line for delivering reliable electricity to customers.
Transmission lines are very expensive to build and the process
is difficult.
Excess wind electricity is currently being sold below the cost
of producing it. Demand for electricity still hasn’t rebounded
causing a revenue shortfall for the Joint System when it sells
excess electricity into the market.
3. (Add your own)
What you can do
1. Contact lawmakers to help them understand
there must be a balance between the environment,
the economy and reliable energy.
2. Call your utility for information on how to
reduce your energy use.
3. Think energy efficiency and conservation where
it makes sense for you and your family.
4. Call your utility and ask to have an informal
energy walk-thru and free energy saving direct
install kit.
The value of electricity
It can be easy to take electricity for granted. It’s
there when we flip a switch, plug in an appliance or
turn on the TV. Electricity helps keep us warm in
the winter and cool in the summer in a reliable and
safe manner. While price increases are unwelcome,
the value of electricity still becomes abundantly
clear when we take the time to think about all the
improvements it has made in our lives.
Your utility is always just a phone call away
whether it is to talk about rates, services or what
goes into providing reliable, affordable and fairly
priced electricity.