At the December 2025 board meeting, Northern Electric Cooperative’s Directors approved new rates for 2026. Northern worked with an independent engineering firm to determine the cooperative’s rate requirements for 2026. The new rates will take effect January 1, 2026 and be reflected on the statement you receive at the beginning of February for your January usage. Members were sent a letter explaining how the adjustment will affect their rates. As a not-for-profit cooperative, Northern Electric strives to hold down costs while providing safe and reliable electricity. We know that any rate increase affects our members, and this decision was not taken lightly.
Northern Electric’s last rate adjustment was implemented on June 1, 2024 after holding rates for six years. Based on the information available to us at that time, we expected the June 1, 2024 rate increase to carry us through 2025. Unfortunately, after our June 1, 2024 rates went into effect, Basin Electric Power Cooperative (Basin) announced an unexpected rate increase of 6.5% for its members for 2025. Basin is our generation cooperative based in Bismarck, ND that delivers electricity across nine states. At that time, Basin was forecasting another increase of 2.7% for their 2026 rates. The Northern Electric Board decided to hold rates until 2026, based on Basin’s forecast.
As cited in previous articles, power costs account for 64% of NEC’s total costs. We already operate on very slim margins to keep costs as low as possible for our members. Since Basin provides 83% of the power that Northern distributes to our members, any rate increase from Basin will have a substantial impact on our budget. The other 17% of wholesale power comes from Western Area Power Administration (WAPA). A federal agency under the Department of Energy, WAPA delivers hydropower from 57 dams to customers across 15 states. WAPA is also raising their rates for the second straight year.
During this process, we have made transparency a focus. As indicated in the October and December editions of Cooperative Connections, on our website, and on our socials, Basin’s rate increase for 2026 is 9.9% instead of the 2.7% that they had forecasted.
Key factors
It’s not just Northern Electric struggling with rate adjustments. Power utilities across the nation are facing historic cost increases. Increasing infrastructure costs in addition to explosive growth in demand for electricity have compounded the issue. Your member-owned cooperative’s primary goals are to provide you with electricity as safely, reliably, and affordably as possible.
Basin initially requested an 18.7% increase for 2026. East River and their member distribution cooperatives advocated to lessen the impact by spreading the increase over 2026 and 2027, resulting in a 9.9% increase for 2026. Basin has indicated they will potentially need a 10% rate increase for 2027.
Basin cited four main reasons for their rate increase:
Meet SPP Requirements: Southwest Power Pool (SPP) is requiring Basin Electric to have higher capacity of dispatchable and dependable power. In essence, SPP is requiring Basin to build extra transmission and generation above and beyond what is needed for existing members and anticipated growth, in case of an emergency. Think back to the unexpected winter outages in February 2021. Extreme cold combined with generating plant outages meant there wasn’t enough electricity being generated to meet the demand, resulting in outages across the nation. Some of Basin’s upcoming projects will help fulfill the requirements. In addition, SPP is requiring the generation cooperatives to increase their capital reserves.
Higher Demand for Electricity: Basin’s load growth is projected to increase at 2.5% per year for the next decade, well above the national average. To serve this growth, Basin is investing in new generation and transmission projects, such as Pioneer Generation Station and Bison Generation Station. Pioneer Generation Station will add 580 MW from natural gas-fired generation, and Bison Generation Station will add 1,490 MW in natural gas-fired generation. These projects will also help fulfill the SPP requirements. The cost to build and run generation stations is higher than ever. Basin’s current generation fleet has an average cost on their books of $800/kW and future building costs are predicted to be $2,700/kW to construct.
Investments in Reliability: Rising costs have made it more expensive to maintain and build infrastructure. Currently, the average cost on Basin’s books for transmission is $400,000 per mile. Future costs are predicted to skyrocket to $2 million per mile. At this time, Basin needs to make significant investments in existing facilities to ensure ongoing reliability. SPP is also requiring Basin to complete a new 160-mile transmission line for additional system reliability.
Commodity Price Variability: Fluctuations in commodity prices affect the cost of fuel for Basin Electric, as well as sales revenue at its subsidiaries, such as Dakota Gasification Company.
Basin has a Large Load Commercial Program that thoroughly vets any large load requests for viability and requires those large loads to help pay for the cost of additional infrastructure and generation. Thus, while Basin is aware of the potential for additional large loads, those theoretical loads are not included in growth forecasting.
At both the national and local levels, electric cooperatives have seen prices for essential materials fluctuate wildly due to supply chain challenges and material shortages over the last five years. The volatile market has made it hard for electric utilities to accurately budget for infrastructure needs. Northern Electric has paid an additional 66% for poles, 64% for pad transformers, 25% for cross arms, and 24% for underground cable since 2022. In addition, Northern Electric, like other local businesses, must protect our assets, attract and retain skilled employees, and keep our system running safely and efficiently.
Membership impact
The impact to our members will vary by rate class and usage. Each member was sent a letter explaining how the adjustment will affect their rates. If you have any questions about your new rate or how to read your bill, please call 605-225-0310 or email info@northernelectric.coop.
On your statement, your bill will be broken down into the main rate components: facility charge, energy charge, capacity charge, and coincident demand charge. No new components are being added. The facility charge is the portion of your bill which reimburses the cooperative for the poles, wires, equipment, and other non-power costs incurred to deliver electricity to you. The energy charge is based on the total electricity used during the billing period. It is measured in kilowatts per hour (kWh). The coincident demand charge is calculated using the kilowatts (kW) used during peak usage across Northern. Northern also pays a coincident demand charge to East River for the kilowatts used during the monthly peak. The capacity charge is for members on coincident demand rate because they require more infrastructure to accommodate their power needs, and is based on the member’s maximum kW demand for a rolling 12-month period.
Sub-meter changes: Northern Electric will no longer control air conditioners during the summer months. Instead, you will have full control over your own usage and can decide how to best manage your demand. If you have a load control device on your air conditioner, please call to let us know and we will remove it. If you have a sub-meter for heating, your rate will change as well. As standard, this rate is re-calculated at the beginning of every year. The rate will vary by season. The rate will be lower Oct. 1 through April 30, and higher May 1 through Sept. 30.
Lighting: Both metered and nonmetered lights will have a rate adjustment.
Your Co-op
Northern Electric board and staff will continue to make decisions with the best interests of the membership in mind. We are here to serve our members. As a non-profit, our core tenant is to provide our member owners reliable, safe, and affordable electricity. Any extra revenue is always returned to the members as capital credits. Even with additional market pressures, we continue to take steps to control costs and reduce the impact on members.
Unfortunately, it’s not possible to focus just on affordability without sacrificing safety and reliability. Northern’s wholesale power costs are 64% of every dollar we collect. Our board and staff manage expenses responsibly and already remove inefficiencies wherever possible. Only 15% of our costs are directly controllable. Of that, 6% is used to maintain our system, including restoring power outages and replacing unreliable infrastructure. The other 9% covers all the general and administrative costs of running a business.
We recognize the impact any rate adjustment has on the families, farms, and businesses we serve. Rate changes are never easy, but they are necessary to ensure that your cooperative continues to provide reliable service today and into the future.
If you have any questions about your rates, please call 605-225-0310.