CEO’s Message – December 2024

How Do You Lasso a Hurricane?

A day without a discussion about rates is a good day. Hopefully, that day is coming soon. Rates have been top of mind, and at the top of every meeting agenda, for me and our entire management team, as well as the Board of Directors for the last several weeks.

As 2024 unfolded, it became clear that a rate increase in 2025 was inevitable. The cost of nearly all the tools, equipment, vehicles, and other materials, not to mention the electricity we purchase, continued to move in 1 direction: up. This has been the trend for several years now and unfortunately, that trend will likely continue. On pages 4 and 5 of this issue, you can see just how much our materials and operating costs have gone up over the last 5 years. The increases are significant.

Our recent conversations here at Columbia REA, in meetings, in hallways, in the break room, and in the Board room, have been focused on 1 question: how can we keep the impending rate increase as low as possible?

1 factor working in our favor is that we are a member-owned co-op. Profit margins are not part of the discussion like they are at other, investor-owned utilities. As a not-for-profit cooperative, our revenue goals are essentially driven by getting back to even, with some cushion, as required in our bylaws. We are beholden to you, the members, not to stockholders.

1 thing that may not be working in our favor, is that there are areas where we will not cut corners in the quest for lower rates. First and foremost is safety. Non-negotiable. Safety is and always will be our number 1 priority: safety for our employees as well as system security for our members. Reliability is second. Our line crews and Operations staff work extremely hard to maintain system reliability and make improvements whenever possible. Sometimes those improvements are optional, sometimes they are not. Fire mitigation procedures are expensive, but not nearly as costly as the fire that they may prevent someday.

Through the hard work of our entire management team and Board, we are looking at a rate increase for 2025 of around 9.5 percent. The early rounds of budget math produced a number that was much higher, but we were able to tighten our collective budget belt to work that number down a bit. We would love to have gone lower, but the financial obligations that come with maintaining system reliability, service to you, and safety for all is a hard floor below which we cannot drop. While nobody feels good about rates going up, our rate and frequency of increase have been considerably lower, and slower, than the continuing rise in operating costs across the entire company, which we do feel good about. Small consolation, perhaps, but I promise you that we have done what we could.

As always, my door is open, and I will pick up my phone. If you have questions or just want to talk about this or any other Columbia REA business, please don’t hesitate to reach out.

Best,

Scott Peters, CEO