Keeping Rates Fair and Service Strong

No one likes it when rates go up. And if you’ve seen pages 4 and 5 of this issue, you have seen that rates will be going up in 2027. It is our responsibility to keep rates steady until the forces that determine rates exert pressure that can no longer be absorbed financially. In the pages of this issue we detail what those forces are right now, and I would like to use this space to talk about how we use that information to set your rates so that we can keep delivering safe, reliable service and keep your co-op financially strong.

Columbia REA’s two largest cost centers are the cost to purchase power, and employee wages and benefits. It’s our job to buy the electricity our members use, and it is crucial that we maintain a skilled workforce to operate and care for the system, restore service during outages and help members. Our cost of power from BPA hasn’t changed, but additional operating costs incurred by BPA are being passed along to their customers in the form of a surcharge. The one positive thing I can say about that is that a portion of the BPA surcharge may go away in the future.

Another expense that impacts our balance sheet is the cost of materials and equipment. The Cooperative Finance Corporation (CFC), which is our bank, recently published their 2026 Grid Price Index, which tracks wholesale prices for equipment purchased by electric cooperatives. The cost of these products is rising faster than prices across the broader economy. As of the second quarter of 2026, equipment costs were about 100% higher than in 2019, while the Consumer Price Index rose about 32% during the same period.

Earlier this year, Columbia REA also completed a cost-of-service study, which helps us determine what it costs Columbia REA to serve different groups of members and different rate classes, and whether current rates bring in enough revenue to cover those costs. The study also shows whether a rate adjustment is needed and, if so, how much. One of the guidelines we use in making those decisions is that the “cost causer should be the cost payer.” Simply put, members or rate classes that create certain costs should pay those costs instead of passing them along to others. The cost-of-service study helps us set rates that more closely match the actual cost of serving each rate class.

After all of this information has been gathered and evaluated, and before any rate adjustment can take effect, Columbia REA’s Board of Directors must review and approve any proposed budget. The Board looks at the cost-of-service study, the cooperative’s financial needs, all of the operating expenses, and the effect on members. The goal is to keep rates as affordable and fair as possible while protecting the cooperative’s long-term financial strength. We know that every dollar matters, and that rate increases affect household and business budgets, and we do not take them lightly. We do our best to keep rates as low as possible, and to leave them alone for as long as we can. As a not-for-profit cooperative, we do not raise rates to make a profit. When we have to raise rates, it’s for two reasons: to cover our costs and to keep your lights on.

If you have any questions or would like to discuss this further, you can reach out to me here at the office. I am always happy to talk with our members.

Best,
Scott Peters, CEO