By Ken Schlimgen, General Manager
Happy New Year! It’s hard to believe how quickly 2025 came and went, but we welcome 2026 with new goals and a continued commitment to serving you, our member-owners. You should receive this newsletter in late January, and in February you’ll see your first electric bill under a new rate structure.
Last fall, Central Electric completed a cost-of-service study to guide the development of the 2026 rate changes, which are necessary due to increases in our wholesale power costs. The purpose of the study is to ensure that rates are fair, transparent and sufficient to maintain the long-term financial health of your cooperative. Simply put, it helps us fairly recover costs from members based on how electricity is used.
As a member-owner, it’s important to understand what makes up the rate you pay, especially with the changes taking effect in 2026 and additional adjustments anticipated in 2027. The cost-of-service study looks at three primary components: fixed operational costs, energy costs and demand (or capacity) costs. Below is a brief overview of how these apply to our largest group of services: residential and farm accounts.
Facility Charge
The facility charge is a $70 fee for single-phase residential members that goes towards the fixed costs of having electricity available to your meter 24 hours a day, 365 days a year. These costs exist regardless of how much electricity you use and include things like poles, wires, meters and system maintenance. This charge does not recover all fixed costs; some fixed costs are recovered through the energy and demand charges.
Energy Charge
The energy charge is based on the total kilowatt-hours (kWh) you use during the month. In addition to covering a share of fixed costs, this charge recovers our wholesale power costs and provides the margins needed to keep your cooperative financially strong. Wholesale power now represents about 70% of our total expenses and increased significantly for 2026. These costs are largely driven by how and when electricity is used across the entire membership, and the cooperative has very limited ability to control them.
Historically, energy rates were structured in tiers, with the price per kWh decreasing as usage increased. Over time, that approach has become unsustainable. Beginning in 2026, all standard energy usage will be billed at a flat rate of 13 cents per kWh. Electric heating energy usage will be billed at a reduced rate of 6.75 cents per kWh.
Demand Charge
You may have noticed a new item labeled “Demand” on your bill starting in late 2024. Demand is measured in kilowatts (kW) and reflects the highest amount of electrical capacity you used during any 15-minute period in the month. Think of it like the speedometer in your car—it shows the fastest speed reached during the month, not how far you traveled.
Until now, demand has been shown on residential bills for informational purposes only. Beginning in 2026, there will be a $1 per kW charge based on your monthly maximum demand for single-phase residential members and a $2 per kW charge for three-phase residential members. The demand charge more fairly assigns costs to members based on how they use the system. Members who use more capacity will contribute slightly more towards the cost of providing that capacity, and smaller users will pay less. You can learn more about demand on page 6.
Looking Ahead
While the cooperative has little control over when and how electricity is used, you have options to manage your bill. Using energy-efficient lighting and appliances can help reduce overall energy consumption and demand. Being mindful of how many appliances, motors and pieces of electrical equipment run at the same time can help lower your demand and the associated charge. You can also choose to participate in our water heater control program, which helps reduce wholesale power costs for the cooperative as a whole.
It is important to note that Central Electric is a not-for-profit cooperative and electric rates are designed to recover the cost of providing electric service to our members. All excess revenue received by the cooperative is paid back to the members in the form of capital credits. There is no benefit to the cooperative to collect more revenue than what is needed to pay expenses and satisfy our lenders.
Central Electric remains committed to providing safe and reliable electricity at a great value. Thank you for taking the time to understand these changes and for being an engaged and informed member-owner as we move forward together.
Until next month, stay safe!