Strategic decisions to position its generation portfolio and other cost-saving measures have Great River Energy entering 2018 with stable wholesale electricity rates and a strong financial position.
Great River Energy’s revenue requirement for next year is budgeted at $969.2 million, down more than $20 million from the 2017 budget. That means lower power costs for Great River Energy’s member cooperatives.
Cost savings in operations and maintenance and fuel contributed significantly to the budget reductions. Keeping costs competitive was especially critical as Great River Energy continues to experience stagnant energy sales.
“Employees found creative ways to work efficiently and reduce spending, so our rates are actually lower than earlier projections,” said Great River Energy Vice President and Chief Financial Officer Larry Schmid.
Great River Energy’s average 2018 wholesale rate is projected to increase 0.75 percent over the budgeted rate for 2017. Great River Energy projects rates to increase by approximately 1.5 percent annually over the next 10 years. Rate increase projections are slower than the pace of inflation despite upward rate pressure caused by reduced energy sales forecasts.
Changes to Great River Energy’s generation portfolio, such as exiting the Genoa 3 contract and retiring Stanton Station, have improved the cooperative’s position in today’s energy market.
“We are now buying more energy from the market at a time when it is advantageous to do so,” added Schmid.
Great River Energy’s 2018 budget includes $92 million of spending for new capital projects – a record low for the cooperative. Total 2018 capital spending is budgeted at $215 million.
Great River Energy budgeted for a margin of $23.0 million in 2018, which will keep Great River Energy on schedule to meet its goal of 20 percent equity by 2020.