Sioux Valley Energy
General Manager/
Chief Executive Officer
In last month’s column, I discussed the 2025 budget, which includes a rate increase in large part due to upward pressure on power supply costs. Approximately 60 percent of the Sioux Valley Energy operating budget goes towards paying for power – but what about the other 40 percent? The second largest cost – and 16 percent of the budget – pays for what we categorize as ‘indirect expenses’ which are interest on loans, depreciation, and taxes. Labor costs comprise around 13 percent of the Cooperative’s operating budget.
Eight percent of the budget goes towards ‘direct expenses’. These costs include day-to-day activities such as cable locating, right-of-way clearing, pole testing, member billing and postage, member meetings, community development, software, director expenses, building expenses, dues, and outside services. The remainder of the budget is the Cooperative’s operating margin, which is required to meet our loan covenants and is returned to the membership on a capital credit retirement schedule.
If you break that down – over 75 cents of each dollar that you spend on your electric bill goes towards paying for power supply, interest, depreciation, and taxes.
Our goal is to hold our distribution expenses (all the things you read about above) steady in 2025; however, as mentioned before, power supply costs are passed through to the membership and will likely lead to a rate increase in January.
Next month, we will explore the factors leading to the increase in power supply costs. Until then, enjoy the autumn months and if you are out in the field – Take the time; Every time – to check your clearances around overhead power lines and other electric facilities.
