Inflation hits power industry, costs continue to rise - South Central Power

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Inflation hits power industry, costs continue to rise

January 4, 2023

By Rick Lemonds, President & CEO

After more than a decade of low and stable interest rates and predictable costs for the goods and services we all need, 2022 was a year of change. We’ve seen supply chain disruptions, material and labor shortages, and sharp increases in the cost of everything from gasoline and natural gas to electricity on the wholesale market.

As a cooperative owned by you, our members, we are doing everything we can to mitigate the impact of those costs on your bill. But because we operate on a cost-based model, certain increases we see from month to month are automatically passed along to you, and can cause you to pay more for the same amount of electricity, even though our rates haven’t changed since April of last year. Those costs include variable items, like the generation and transmission charge, that can go up or down during any given bill cycle.

Your bill also includes a fixed component, the consumer charge. Though the consumer charge only changes when your cooperative sets a rate adjustment, the behind-the-scenes costs that make up the consumer charge continue to rise. Those costs include much of what it takes to have the power available to you when you need it. Items like meters, poles, wire, and substation equipment continue to rise in price to your cooperative. In turn, we constantly must review our rates to ensure we are adequately recovering the costs involved in delivering your power.

My pledge to you is this: We will remain cost-competitive compared to Ohio’s other electric suppliers — some of whom are facing sharp increases in costs due to skyrocketing wholesale energy prices. Our ownership share in Buckeye Power, which generates most of its electricity right here in Ohio, helps us keep those costs comparatively low. However, we must purchase the same power poles, transformers, and other materials and equipment as every other electric utility, and unfortunately, those costs are harder to control.

Some of the biggest expense increases we’re facing are for fuel, labor, insurance, and equipment — demonstrated in the graphic below. While we’re doing everything we can to hold the line on price increases, at some point, if prices continue to climb, we’ll have to consider the best and most equitable way to spread these costs across our membership.

Remember that if you want to lower your bill, our website and social media channels (as well as this magazine) feature tips and tricks for saving electricity. You can also contact our office for more personal advice. Stay safe, and Happy New Year!

Cross arm & cross arm brace - 31% increase
Wires - 46% increase
Transformer - 35% increase
Insulators - 33% increase
Pole - 64% increase
Service wire - 26% increase
Conduit - 413% increase
Anchor & rod - 61% increase
* Increases calculated from one-year increment from 2021 - 2022

From the January 2023 issue of Ohio Cooperative Living.