Rate Changes – 2026

In August at our annual meeting, I was joined onstage by Eric Hobbie, President and CEO of our power supplier Prairie Power (PPI), who made the comment “currently and for the foreseeable future, there is only upward pressure on electricity rates and no downward pressure”. That comment has continued to resonate with me as we look towards 2026 after implementing a rate increase of 7% across all our rate classes which you will begin to see with the bills you receive in February. The question that most are asking is “why are electricity prices rising so rapidly”.

If you are reading the headlines, it will almost always point to Data Centers as a leading cause due to big companies like Google, Amazon and Microsoft who see a future that needs all that data storage to facilitate artificial intelligence development. While we have not been impacted by data center development directly, we are seeing developers signing long term agreements with existing generation facilities which will make availability of reliable generation harder to come by since little to no new traditional baseload generation (coal, nuclear) is currently being built.

This is not a new issue and one that I have written about before. The problem is not the addition of intermittent generation assets like wind and solar but more the push to retire baseload units primarily fueled by coal. Wind and solar generation output can vary greatly over the course of a season and even over a day. To maintain reliability, utilities need to have generation assets available to run on overcast days and days with less wind, creating the need for fast reacting generation to be online quickly. However, existing legislation by the state has created a timeline for the elimination of fossil fuels as a generation source. Basically, it comes down to supply and demand and with less availability of source power, the more expensive it will become.

The other price pressures come in the form of inflation and natural gas prices. We are still seeing the higher material cost that we first saw during Covid. We saw material prices jump 40% or more in some cases and those same prices have not retreated since. In many cases there are limited manufacturers of certain products that we purchase which makes price shopping difficult. Natural gas has enjoyed several years of stable pricing due to the shale revolution. However, with that abundance of natural gas availability, producers have been looking at additional markets to sell to. A few short years ago, our country was preparing to import natural gas, but those same import terminals were later refitted to export natural gas to countries that pay more than the United States for natural gas. The cost of natural gas will most likely increase for US consumers as the global market is further developed. Electricity markets have long been directly impacted by natural gas prices since it is a primary source of generation fuel and competition with global markets will only make it more expensive.

Finally, the good news is we are working to keep rates as stable as possible. We will continue to push back on higher costs and provide the highest reliability possible. Our mission has not changed since we began as a non-profit cooperative in 1937, to provide reliable and affordable power to the members of McDonough Power Cooperative.

Mike Smith
President and CEO