News > CEO’s Message – December 2025

CEO’s Message – December 2025

Managing Rising Costs

Over the last few months, Stearns Electric employees, guided by the Cooperative’s strategic plan, developed initiatives and a preliminary budget for 2026. As you can imagine, costs continue to rise across our Cooperative – from trucks and tools to equipment and personnel. Many of us are already managing cost increases at home, and I understand that rising electric costs add to that frustration. This month I want to outline some of the economic and industry pressures and how our Cooperative is managing the costs we can control. 

COST DRIVERS 

• Limited growth: While Stearns Electric energy sales continue to grow at a modest pace, it hasn’t been enough to keep pace with rising inflation. 
• Higher material and supply prices: The material and equipment we count on to provide reliable electric service (bucket trucks, transformers, wire and cable) costs two to three times more than just a couple years ago. 
• Personnel: Labor, benefits and healthcare costs continue to rise, and in 2026 we will implement the state-mandated Minnesota Paid Family and Medical Leave Act. Though these costs are shared with employees, they still impact our bottom line. 
• Cost of wholesale power: Nearly 67% of the revenue we take in goes toward purchasing wholesale power. In 2026, wholesale power costs are forecasted to rise by 4.5% over 2025 levels, attributed to higher energy market prices, investment in regional transmission projects and an evolving generation portfolio. 

COST-SAVING INITIATIVES
Because we have limited control over these industry-wide pressures, we remain focused on managing the costs we can influence: 

• Improving the write-offs and bad debt process to reduce collection fees. 
• Implementing new tools in our account management system to streamline workflow and enhance automation. 
• Using multiple distributors for equipment and supplies to ensure competitive pricing. 
• Bulk purchasing of supplies whenever possible. 
• Expanding paperless operations through iPads, digital job briefings and electronic reporting. 

BUDGET REVIEW AND RATE OUTLOOK
The preliminary 2026 budget was presented to the Board in November with final review set for December. Your member-elected Directors are highly engaged in reviewing the 2026 plan, asking thoughtful, and sometimes challenging, questions throughout the process. 

In early 2026, an independent firm will conduct a Cost-of-Service study to ensure Stearns Electric remains financially stable, maintains competitive rates and is able to continue delivering reliable, high-quality service. Until the study is complete, we will not know the extent of a rate adjustment, but early indicators point to the need to increase rates within the second quarter of next year. 

These are challenging times and no one wants to hear about rising costs. But as members, I want you to be prepared. We will continue doing our best to minimize the impact on our members. 

Thank you for allowing us to serve your energy needs this year. On behalf of the entire Co-op and your Board of Directors, we wish you a happy holiday season. 

Sincerely,

Matt O’Shea
Chief Executive Officer