Adapting and Evolving

From the gas pump to the grocery store, we’ve all felt the pinch when it comes to higher costs. 

At Pioneer Electric, we are committed to providing reliable and affordable electric service. Over the years, we’ve worked to contain costs while upholding the highest standards of service. However, we face challenges that require us to adapt and evolve to continue delivering on that promise to you. This month, I’ll explain some of the financial challenges Pioneer Electric is facing, what we are doing to address them and what you can expect from us moving forward. 

As a member-owned cooperative, we don’t set our rates to make a profit. Instead, we are service-driven and operate at cost. As a business, we must collect enough funds to cover our expenses. Our lenders also require that we maintain a certain debt-service coverage ratio, a measure of our ability to generate enough income to pay back loans. 

Another challenge is the low population density of the areas we serve. On average, Pioneer Electric serves four members per mile of line, compared to about 30 customers per mile for utilities that serve more populous areas. Despite this disparity, our cost to members is competitive with our neighbors. That’s a testament to our Board and staff’s diligence to maximizing efficiency without sacrificing service.

Like any business, we face increasing operational costs, and inflation has had a notable impact on all our operations — from the cost of wholesale power to diesel fuel and equipment. In many cases, the price we pay for critical components of our distribution infrastructure (such as poles, wires, transformers and meters) has doubled over the past five years. 
PowerSouth Energy, our wholesale power provider, is passing along a 4% rate increase due to the rising costs of producing power. Since half of every dollar members spend on electricity goes directly toward wholesale power costs, this creates additional financial pressures on the cooperative.

The cooperative’s accounting firm conducted a study to determine how best to respond to these economic challenges and identify revenue needs for the next five years. While we have worked diligently to minimize the impact of rising costs on our members, the study concluded that a rate adjustment is necessary to meet our financial obligations and budget needs. 

Because of the schedule requirements for this publication, I’m writing this column before our Board has made a final determination about any rate modifications. However, given our current projections, I expect rate adjustments will take place as soon as April to support the integrity of our operations and long-term future. 

We understand that rate changes are difficult for our members. Please know that we are making this decision after prayerful consideration and with the interest of our entire cooperative in mind. We will continue to explore opportunities to minimize costs wherever possible.

We are striving to offer rate options that give you an opportunity to better control your costs. For example, the Time-of-Use rate allows you to save money by shifting usage to different times of day. If you’re interested in finding out more, give us a call.

I am grateful for your continued trust and support. We are honored to serve you and are here to assist you as we navigate this time together.