2026 Rate Adjustment Frequently Asked Questions

The 2026 adjustment will affect members differently based on usage and rate class. Residential members make up our largest rate class based on the total amount of energy used across our distribution system. Our residential members make up a rate class called General Single Phase (GS1).

View the graphs linked here to compare monthly bill impacts for members in the GS1 rate (based on energy use) before and after the rate adjustment implementation.

2026 Rate Adjustment non-Summer Bill Impact GS1

2026 Rate Adjustment Summer Bill Impact GS1

Monthly bill impact percentages that are greater than the overall annual average increase of 3.3% happen for a few reasons:

- An account has lower-than-average monthly energy use. Even though energy charges are low, the total Fixed Charge increased $5.00 (or 14.6%). Accounts impacted in this scenario are often seasonal properties or apartment dwellings. See below for additional information on the Fixed Charge.

- Energy rates are higher in the summer compared to non-summer energy rates.

- Rate class adjustments were made in accordance with the COS study results - some rate classes required a higher percent increase while others required a smaller increase.

These reasons are a result of the Cost-of-Service (COS) study analysis. The COS study aligns incurred costs to appropriate rate classes and rate components ensuring any changes to rates were implemented fairly across all Stearns Electric member-consumers and rate classes.

Electric cooperatives like Stearns Electric are not-for-profit, meaning we work toward a zero-based budget by the end of each year. However, projections for 2026-2030 indicate that the Cooperative needs an increase in revenue to continue providing our members with the reliable electricity you depend on.

We want our members to understand what goes into their bill and why bills are increasing. You can read further on in this document for details on the specific driving factors of the rate increase and how it was determined.

Stearns Electric is facing sustained cost pressures that are largely outside the Cooperative’s control. Wholesale power − our single largest expense − continues to increase as Great River Energy invests in transmission infrastructure needed to maintain long term reliability. At the same time, inflation is driving up the cost of equipment, materials, trucks, tools and personnel costs, while energy sales growth has not kept pace with those rising costs.

Even with aggressive cost saving measures and operational efficiencies, these combined pressures mean a rate adjustment is necessary to keep the Cooperative financially stable and able to provide safe, reliable service.

Like many of the members and businesses we serve, Stearns Electric’s finances and operations have been significantly affected by the rising costs of equipment, materials and services. For example, the price for key pieces of our distribution infrastructure such as poles, wires, transformers and meters has risen by as much as 50% over the last two years.

While Stearns Electric’s membership continues to grow, that growth has slowed over the past decade, which limits overall energy sales. At the same time, we are still responsible for maintaining more than 2,000 square miles of electric infrastructure needed to reliably serve over 29,000 members.

In addition, generation and transmission costs from Great River Energy (GRE) and the Western Area Power Administration (WAPA), our wholesale power providers, have increased, too. These increases are driven by higher power market prices and rising capital costs. Since our last rate adjustment in 2023, annual wholesale power cost increases in 2024, 2025 and 2026 have resulted in a 7.7% increase to members’ bills through the Power Cost Adjustment (PCA).

Wholesale power costs

-Minimal load growth throughout Great River Energy’s footprint

-Increased prices to purchase electricity from the market

-Increased personnel costs

-Higher capital costs, mainly due to upcoming local transmission projects that will improve reliability and replace aging power lines

Distribution expenses

-Minimal growth

-Increased material and equipment costs

-Increased operational expenses (i.e., inflation, interest, depreciation, supplies, etc.)

-Increased personnel costs, including benefits, employee pay and insurance costs, as well as increased costs needed to comply with new legislation such as Minnesota’s Paid Leave program

Stearns Electric’s new Operations Center and Headquarters is not a primary factor of the 2026 rate adjustment. In 2023, the Cooperative added $3 to the monthly Fixed Charge specifically to cover most of the construction cost. The earlier adjustment was intended to pay for the new facility and covered a majority of those expenses. The new Operations Center and Headquarters was planned many years in advance, and despite rising costs, it was completed more than one million dollars under budget.

The 2026 rate adjustment is focused on addressing rising system wide costs and maintaining the long term financial stability needed to continue making ongoing investments in safe, reliable electric service for the future – not funding the new headquarters.

The new Operations Center opened in August 2025 and is already improving efficiency, safety and coordination. Over time, these improvements will help Stearns Electric operate more efficiently and better manage costs while supporting reliable service for our members.

Stearns Electric worked with Power System Engineering (PSE), an independent consulting firm that specializes in helping electric utilities plan for future costs and system needs. PSE completed a detailed Cost of Service study to look at what it truly costs to operate the Cooperative and maintain reliable electric service over time.

The study showed that current revenue is not enough to support day to day operations and the long term investments needed to keep the electric system safe and reliable. Using this information, the Stearns Electric Board of Directors approved a new rate plan they believe best supports the Cooperative’s financial health while treating all members fairly.

A Cost-of-Service study analyzes the Cooperative’s revenue requirements, financial forecasts, projected wholesale energy rates and more to identify costs and revenue needs for the coming years. The study further identifies how those costs are incurred and aligns them to appropriate rate classes and rate components, ultimately creating a guide for designing rates that are equitable to all our members.

To understand how best to respond to these financial challenges, every three to five years the Cooperative hires an independent consultant to perform a Cost-of-Service study to identify costs and revenue needs for the coming years. This Cost-of-Service study process has been used prior to all previous rate adjustments to ensure any changes to rates are made equitably across all of the Cooperative’s rate classes.

As your power provider, it is our responsibility to manage the costs we can control before asking our members to pay more for their energy.

We’ve been able to operate without a rate increase the last few years by actively managing costs, making efficiency improvements and maximizing technology.

Some specific ways we have controlled costs over the last three years include:

-Continuing to offer load management programs to help reduce wholesale energy costs for both members and the Cooperative

-Analyzing energy consumption across our distribution system to better understand demand peaks and implementing peak reduction measures

-Ensuring our Right-of-Way program continuously meets performance metrics and safety standards while remaining within budget

-Remaining committed to bidding out materials and projects, such as power poles, wire, transformers and office supplies, to get the best value

-Actively connecting with state representatives and lobbying for smart energy legislation

-Managing asset (i.e., vehicles, equipment, trailers, printers, iPads, etc.) replacement with reliability and extending the life of equipment whenever possible

-Conducting a comprehensive review of sales tax on all purchases to ensure eligible tax savings are applied

-Evaluating and offering various employee health insurance options

-Reducing printer inventory and implementing secure print to minimize unnecessary printing

-Installing safety equipment vending machines to improve efficiency and streamline reordering

As a not-for-profit electric cooperative, we don’t set our rates to make a profit. We are service-driven and operate at cost. When profits are made (margins), they are returned to members in the form of Capital Credits.

View the rates effective May 1, 2026 for our most common rate classes at https://www.stearnselectric.org/wp-content/uploads/2026/04/2026-Rate-Adjustment-CommonClasses.pdf.

Additional rate class adjustments can be reviewed on our website at stearnselectric.org/rate-adjustment-2026.

In the past, Stearns Electric has made larger rate adjustments that were designed to last several years. We often call this a “traditional” rate adjustment. With this approach, the Cooperative collects all the revenue it expects to need starting in the first year, and that rate typically stays in place for three to five years. This approach results in over collecting in early years and under collecting in later years of a rate adjustment.

Beginning in 2026, Stearns Electric will move to an annual rate adjustment approach. This means smaller, more predictable changes each year as needed − similar to cost of living adjustments − instead of larger increases spread years apart.

Annual adjustments allow the Cooperative to collect only the revenue needed for that specific year. This helps keep rates fair by matching costs more closely to actual needs, while ensuring Stearns Electric can continue investing in a safe, reliable electric system that keeps up with member demand.

View graph examples at https://www.stearnselectric.org/wp-content/uploads/2026/04/Traditional_Annual.pdf

By moving to smaller annual rate adjustments instead of larger increases every few years, we can better match rates to actual costs and only collect the revenue that is required to provide safe and reliable service.

In the past, waiting several years between rate adjustments sometimes resulted in larger, double digit increases all at once. Annual adjustments allow for smaller, more predictable changes each year − similar to cost of living adjustments − which can be easier for members to plan for and manage.

Based on our most recent Cost of Service study, smaller annual adjustments are expected over the next few years as costs continue to rise. The 2026 adjustment is set at 3.3% and will affect members differently based on usage and rate plans. We are currently forecasting adjustments of 3.3% for 2027 and 2.4% for 2028.

Stearns Electric will continue managing the costs we can control and working in members’ best interests to keep bills as low as possible while still providing the safe, reliable electricity you depend on.

Further, we will continue conducting an independent rate study every three to five years to ensure our rates remain aligned in a way that is fair and equitable for all members.

After completing a Cost of Service study, Stearns Electric works with Power System Engineering (PSE), along with Cooperative staff and the Board of Directors, to design rates that reflect real costs and treat members fairly. This is a common process used by electric utilities to make sure rates are set carefully and responsibly.

When designing rates, several goals are considered, including:

-Fairness and equity for all members

-Making sure rates cover the cost of providing service

-Keeping rates stable and consistent over time

-Matching costs to how electricity is used

-Avoiding sudden or abrupt changes

-Keeping rates understandable and manageable

-Making sure rates remain competitive

Not all of these goals can be fully met at the same time. That’s why PSE, Cooperative staff and the Board work together to balance these factors and use their judgment to set rates that best serve the membership as a whole.

Stearns Electric does not generate electricity. Instead, the Cooperative purchases power from Great River Energy (GRE) and the Western Area Power Administration (WAPA) and then delivers that electricity to members through our local distribution system. This means a large portion of what members pay each month goes directly toward the cost of buying power.

In fact, about 64 cents of every dollar members pay for electricity goes toward purchasing the power that Stearns Electric delivers.

When GRE or WAPA’s wholesale power costs increase, those costs are passed on to Stearns Electric and, in turn, to members through the Power Cost Adjustment (PCA). Even though Stearns Electric’s base distribution rates have remained unchanged since 2023, wholesale power costs have increased each year.

When the new rates take effect on May 1, 2026, the annual portion of the PCA will be built into the energy rate. After that, any PCA charges or credits you see on your bill will reflect month to month changes in wholesale power costs.

Stearns Electric’s rates are fair and competitive when compared with other electric utilities in Minnesota. The chart below linked below shows how our rates compare to nearby cooperatives and other providers across the state.

Link: https://www.stearnselectric.org/wp-content/uploads/2026/04/2026-RateComparison.pdf

The Fixed Charge is a monthly charge that helps cover the cost of delivering electricity to your home or business. This includes things like maintaining power lines, making repairs and having crews and equipment ready to respond when service is needed. These costs exist no matter how much electricity you use.

Because these delivery costs don’t change based on usage, the charge is “fixed” and is the same for all members within each rate class.

Most of the costs required to provide safe, reliable electric service are fixed. This includes owning, operating and maintaining more than 4,200 miles of power lines across our service area, as well as basic business functions like billing, customer service and accounting. The Fixed Charge helps ensure these essential services are always available to our members.

Stearns Electric understands that rising costs can be challenging, and we are here to help. If you’re having trouble paying your electric bill, please reach out to us as soon as possible. Our team is available during regular business hours at (800) 962 0655 to talk through your options and help you find support.

There may be payment arrangements or assistance programs available, including Minnesota programs that help income qualified households with energy costs. We can help connect you with those resources.

No member should be without electricity when they need it. We are committed to working with our members and treating every situation with care and respect.

Stearns Electric offers several tools and programs that can help members better manage their energy use and lower their electric bills. Small changes can add up, and we’re here to help you find options that work for your home or business.

We can help members identify energy saving improvements, and rebates are available for many upgrades. These programs are available to residential, commercial, industrial and agricultural members.

Stearns Electric also offers options that can make bills easier to manage, including automatic payment, budget billing and energy efficiency programs. Many members find these tools helpful in smoothing out costs and staying on track.

To learn more about these programs and find the options that are right for you, please visit our website or contact us – we’re happy to help.