Rising Energy Prices?

You’ve likely seen articles in the newspaper and online about rising electricity costs due to surging demand from large loads like data centers. What these articles fail to note is that cooperative members, in Ohio anyway, are different.  

Because you are a member of URE, an electric cooperative, unlike investor-owned utility customers, you have a stake in your utility – from the meter all the way up to the generator. 

Without getting too technical, let me just say that the electricity market, at least at a wholesale level, can go up and down in price depending on the demand for power.  PJM, the grid operator in this region of the country, operates both an energy and capacity market. The intention of these markets is to incentivize companies to invest in generation to take advantage of higher capacity or energy prices as demand increases. It’s basic economics. 

Energy is the kilowatt-hours (kWh) you see reported on your bill each month. Use fewer kWh, your bill is lower; use more your bill is higher. And boy, did most of us use a lot of energy last month because of the hot weather! But capacity is different – it accounts for how much power is needed at any one moment in time and is baked into the kWh rate for residential consumers. 

Recently, the PJM market priced capacity at a shockingly high premium, simply because there is a large demand for it, and a limited supply of generation. This high-priced capacity has significantly affected power bills for all consumers in the PJM market area. But, again, cooperative members are different and somewhat shielded from this capacity price spike. 

While you are a member and owner of URE, URE is a member and owner of Buckeye Power. Buckeye power owns the generation assets to provide energy and capacity for all of Ohio’s cooperative members. That’s a big deal, and something that very smart co-op leaders decided to do many years ago when Ohio deregulated the electric industry. Basically, they don’t solely depend on market pricing for rates. 

This generation ownership provides stably priced wholesale energy and capacity. In fact, Buckeye Power is often able to sell excess power into the PJM market at these high prices, helping to keep our members’ wholesale generation prices as low as possible. 

I know, that’s great, right? But it’s not all roses. Like everyone, we’ve felt the effects of inflation on the cost of materials and equipment needed to deliver power. Essential equipment has skyrocketed in price – transformers, poles, and wire cost 40–70% more than a couple of years ago. Transmission charges are surging too – Buckeye’s cost to use the high-voltage grid has roughly tripled in the past decade. 

We responded to these increased costs and implemented rate adjustments, the last of which was finalized this month – mainly to the base service charge – which is a flat monthly cost, not affected by how much energy you use. 

On your most recent bill, you’ll notice that the fixed service charge increased from $30 to $35. This was the last year of a planned rate adjustment to help offset the cost increases we’ve seen to keep the lights on. Although these cost increases are out of our direct control, we do everything we can to save money and keep rates down. Any margins we earn above the cost of service are allocated back to our members, so there’s no incentive for us to hike rates unnecessarily. 

Thanks to our cooperative-owned power resources, URE members are largely shielded from dramatic market price spikes. However, we still face rising costs to maintain our grid and power plants. We’re committed to navigating this energy market while keeping your rates as fair as possible. And if you ever need help understanding your bill or ways to save energy and money, we’re here for you – because we’re not just your electric provider; we’re YOUR electric cooperative.