FROM THE GAS PUMP to the grocery store, we’ve all seen costs going up. Pandemic-driven supply chain disruptions, a war in Ukraine, and skyrocketing natural gas prices have fueled inflationary pressures and cost increases in just about every sector, including electric generation. As a result, energy bills are going up.
In this challenging economic climate, your cooperative remains committed to containing costs. We have had a remarkable record of stable and low-cost generation rates over the past several years, but power costs are rising. While your generation rate is set to increase in March 2023, it will still be among the lowest in the region. That’s because your not-for-profit cooperative has long made investments to help curb costs to our members.
The notion of investing in our areas and taking care of our own needs has endured throughout our cooperative history. In 1946, it led to the creation of Allegheny Electric Cooperative, Inc. (Allegheny) by rural electric cooperatives in the state for that very purpose: taking care of our own power needs.
Today, Allegheny is the energy provider for 14 electric cooperatives in Pennsylvania and New Jersey, including Northwestern REC. Each cooperative has a seat on the Allegheny board of directors, whose decisions continue to be driven by the needs of our rural communities and their residents.
In the late 1970s, Allegheny made the decision to invest in a nuclear plant, becoming a part-owner in the Susquehanna Steam Electric Station (Susquehanna) in Luzerne County. Today, Allegheny’s 10 percent share of the plant provides more than 50 percent of all the energy needs of all of Allegheny’s member cooperatives.
Allegheny also owns the Raystown Hydroelectric Plant, a hydropower dam in Huntingdon County. In addition, cooperatives have been receiving generation since the 1960s through long-term hydropower agreements negotiated with the New York Power Authority.
Combined with Susquehanna’s output, these investments have helped shield cooperative consumers from periods of intense market volatility. They represent roughly 65% of our power portfolio, requiring Allegheny to purchase only about 35% for our remaining needs. This portfolio has been a bulwark against recent rising energy costs. Whereas investor-owned utilities are subject to 100% of the spikes in market prices, our exposure has been limited to this 35%, helping to temper cost increases.
To further assist consumers, cooperatives are putting revenue toward tamping down generation costs for 2023. Used for rainy-day situations like the current market volatility, Allegheny maintains a deferred revenue fund. The Allegheny board has decided to use a portion of this fund to help absorb the impact of the generation rate increase in 2023.
The decision to raise rates is never taken lightly. It’s made by a board of fellow cooperative members who understand what a cost increase will mean to the local community. That’s why cooperatives work hard at keeping costs down. The generation rate increase for 2023, while necessary, also reflects that continuing cooperative effort to contain costs.
Once we know how the rate increase is going to affect our members, we will update you here, in Penn Lines, and with direct mail. Please contact us at 800-352-0014 or info@northwesternrec.com with any questions.