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CEO’s Message – January 2025

Powering Reliability Amid Rising Costs

NAVIGATING RISING ENERGY COSTS
As we head into 2025, I want to provide you with an update on a critical aspect of Stearns Electric’s operations: wholesale power. Wholesale power accounts for 65% of our Cooperative’s expenses, of which approximately 90% comes from Great River Energy (GRE) and the remainder comes from the Western Area Power Administration (WAPA). GRE and WAPA announced 2025 average rate increases of 5.7% and 7.5% respectively.

Wholesale power expenses are beyond our direct control but significantly impact the electricity costs you see on your monthly bills. While we’ve worked hard to keep our rates steady at Stearns Electric, rising costs of wholesale power—driven by necessary transmission investments and inflation— will result in an increase in your electricity costs in 2025.

RISING INFLATIONARY COSTS
As consumers, we have already experienced inflationary increases in our daily expenses. At Stearns Electric, inflation has driven up the prices of essential materials like transformers, cables and poles, and impacted the cost of generating and transmitting electricity, which contributes to increases in wholesale power costs.

TRANSMISSION INVESTMENTS
A few years ago, the Midwest Independent System Operator (MISO) approved 18 high-voltage transmission projects within the Midwest Subregion. At the end of 2024, MISO approved an additional 24 projects. GRE has and will continue to invest in a subset of these projects located in Minnesota. Though these projects are a significant investment for power suppliers across the MISO North and Central footprints and contribute to overall increases in wholesale electricity rates, they are necessary to ensure long-term reliability, support expected load growth and help meet legislative requirements.

HOW DOES THIS IMPACT MEMBERS?
The Power Cost Adjustment (PCA) is a charge or credit on your electric bill that reflects fluctuations in the cost of wholesale power. The PCA consists of two components: 

  • Base PCA: A known amount driven by wholesale power cost variances year over year. The Base PCA is incorporated into our Cooperative rates during rate adjustments. Since our last rate adjustment in 2023, wholesale power costs have increased, leading to a Base PCA charge. 
  • Monthly PCA: A fluctuating amount that largely reflects the difference between forecasted and actual MISO market energy costs throughout the month. 

With the increase in wholesale power costs in 2025, we anticipate a PCA charge throughout 2025. 

Our leadership team and your Board of Directors work hard to control costs within our reach while ensuring reliability and member satisfaction. However, wholesale power is an expense beyond our direct control. 

If you have additional questions regarding GRE’s transmission projects or wholesale power costs, please contact me during regular business hours. On behalf of the entire Cooperative and your Board, thank you for letting us serve you. 

Sincerely,

Matt O’Shea
Chief Executive Officer

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