As inflation creeps in, we're keeping costs in check for you - South Central Power

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As inflation creeps in, we’re keeping costs in check for you

January 31, 2022

If you’ve been to a grocery store, farm supply, or gas station or gone out to eat at your favorite local restaurant recently, you’ve probably noticed something — prices of everything are going up, and there doesn’t seem to be any end in sight. In December, the U.S. Department of Labor announced that its producer price index, a measure of wholesale prices and key indicator of inflation, was up more than 9% in 2021.

In the energy sector, things are worse, as natural gas prices soared at the start of winter, just in time for the home heating season. As natural gas is one of the main fuels used for U.S. electric production, that increase caused a rise in average wholesale power costs across the country as well. At South Central Power Company, we’re not immune to the price increases we see all around us. We’ve absorbed increases in the cost of everything from gas and diesel for our vehicles to office supplies and materials like poles and wires.

Though it’s a complex subject, for brevity’s sake, this month I wanted to share with you three things your cooperative is doing to save you money and keep costs down.

  1. Power generation: While a lot of the country has converted to burning natural gas instead of coal, South Central Power and other cooperatives in Ohio are benefiting from the relatively stable cost of coal power production. We’ve invested to make Cardinal Plant a cleaner and more efficient plant, generating electricity and contributing to the economy right here in Ohio.
  2. Cooperation among cooperatives: South Central Power is one of roughly 900 electric cooperatives across the nation. Together, we do business in a unique way that helps you benefit from the personal touch of a local company, with the buying and borrowing power of a much larger enterprise. We collaborate with other cooperatives across the state and nation on borrowing for projects like transmission line construction, and we participate in purchasing cooperatives that let us access better pricing for things like the poles, wires, and transformers we need to operate our business.
  3. Facilities consolidation: Our trustees and senior staff spent several years looking at our aging facilities and future needs and determined the lowest-cost option was to consolidate from five facilities into three. While we made this shift without the need to cut staff, we’ll benefit from long-term operating savings because the cost of maintaining the workforce and physical plants over the course of the coming years will be lower than it would have been to update and continue to maintain those five separate facilities and workforces.

Even with these steps to save you money and operate the cooperative as efficiently as possible, we can’t avoid the fact that our cost of doing business has risen. Though we postponed a planned rate adjustment in April 2020 that would have taken effect right as the COVID-19 pandemic brought a wave of economic shutdowns, we can’t roll back those costs that continue to rise. You’ll see details on page 18 of this issue of a planned rate adjustment — our first since 2017 — that will go into effect in April. While no one ever wants to see a rate increase, we believe by taking this step now and adjusting our rate in keeping with our rising costs, we can continue to provide you with the reliable and still affordable service you deserve, now and in the future.

As inflation creeps in, we’re keeping costs in check for you

Richard Lemonds
President & CEO, South Central Power Company

From the February 2022 issue of Ohio Cooperative Living