Many people in our community are facing challenging times, and no one wants to see rising electric bills. We recognize our responsibility to work to keep bills as low as possible and have worked hard to manage our costs.

In April 2026, we announced the results of our cost-of-service study, which indicated the need for a rate increase for our members. Your Board of Directors made the decision to move forward with annual rate adjustments starting in 2026. Beginning on January 1, 2027, members will see an overall average rate adjustment of 2.8%.

The 2027 adjustment will affect members differently based on usage and rate class (see question #4 below).</p?

The 2.8% increase represents the overall percentage that the Cooperative’s revenue collected through electric rates will increase and is the annual average rate adjustment across all members and rate classes. The 2.8%adjustment equates to approximately $2.2 million in additional revenue for the Cooperative over a year’s time.

Find full details of the rate adjustment, including a breakdown of the new rates for each Stearns Electric association rate class, at stearnselectric.org/rate-adjustment-2027.

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’s Board of Directors voted to 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.

You can see from the graphs below that the rate increase of 2.8% in 2027 is actually lower than the predicted 3.3% increase from the most recent cost-of-service study in early 2026.

Annual adjustments allow the Cooperative to collect only the revenue needed for that specific year. By moving to smaller annual rate adjustments instead of larger increases every few years, it helps keep rates fair by matching costs more closely to actual needs.

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.

The 2027 adjustment will affect members differently based on usage and rate class. Most residential members are part of our largest rate class based on the total amount of energy used across our distribution system called General Single Phase (GS1).

The graphs below compare monthly bill impacts for members in the GS1 rate (based on energy use) before and after the rate adjustment implementation. At this time, these graphs do NOT include the Base Power Cost Adjustment (PCA) as it remains unknown. This information will be updated as soon as the Base PCA is determined for 2027.

Monthly bill totals are on the left (vertical axis,) while monthly energy use levels are along the bottom (horizontal axis.) Identified above each energy level on the graph are the anticipated rate increases in both dollars and percentages. Please be aware that taxes, local fees and variable monthly power cost adjustment (PCA) charges/credits are not included.

Monthly bill impact percentages that are greater than the overall annual average increase of 2.8% 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 $2.75 (or 7.0%). 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 most recent cost-of-service (COS) study results -some rate classes required a higher percent increase while others required a smaller increase.

These reasons are a result of the 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 2027-2031 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.

The chart below reflects the change in rates effective January 1, 2027 for our most common rate classes. Additional rate class adjustments can be reviewed on our website at stearnselectric.org/rate-adjustment-2027.

Beginning in January 2027, approximately 670 members will begin seeing a new line item on their monthly bill: a Demand Charge. If you are one of these members, you will receive direct communication from the Cooperative.

Visit our website, stearnselectric.org/demand to learn more.