CEO Message – July 2022

With record high inflation of nearly 8%, supply chain disruptions and soaring commodity prices are having a dramatic impact on our costs to supply electricity to you. More specifically, over the past 12 months, natural gas prices have risen 117%, coal prices have risen 167% and power market prices have risen 164%. These three variable costs components represent over 50% of our wholesale power supply costs from Hoosier Energy. In turn, wholesale power supply costs represent 70-75% of Southern Indiana Power’s annual operating costs. That’s right, for every $1 you pay Southern Indiana Power approximately 70 cents gets passed on to Hoosier Energy for power supply. In summary, these costs have increased significantly and are continuing to rise.

This is a result of global supply and demand. Even here in Indiana, we are impacted by the global economy, including the demand for U.S. coal in China and U.S. liquified natural gas (LNG) in Europe. This demand has been the largest driver of these cost increases.

The tight labor market and disruptions to global supply chains are also creating challenges with getting skilled people and materials we need to operate and maintain the system. Southern Indiana Power and Hoosier Energy are both non-profit organizations owned by our members. Both cooperatives are doing everything possible to try to minimize these cost impacts to you while at the same time not jeopardizing reliability of the electric system.

Beginning July 1, members on average will see a 4.9% increase on their bills. This will bring the total 2022 average increase on their electric bills to 10.9%. The monthly bill for members using 1,000 kilowatt-hours will be about $4.96 higher than their current bills. I know this is not the news you wanted to hear, or is it the news I want to deliver, but unfortunately, it seems the costs of everything we buy are increasing each day and that includes electricity. Since these rising costs cross all spectrums of the economy, it is difficult to know exactly how long prices may remain elevated. However, we expect the challenging environment to continue into the foreseeable future, possibly the next few years.

You can help minimize that impact by taking actions to reduce electricity consumption. Things like turning off lights not needed, adjusting your thermostat a little higher this summer, and maybe even considering a smart thermostat if you don’t already have one are all good places to start.

Southern Indiana Power is a local utility with employees and a member-elected board from your community, so we share your interests and concerns. We strive to provide reasonable rates, excellent reliability and great customer service compared to investor-owned utilities because of our local focus. Being a not for-profit electric utility, when we need to make a rate change, it is simply to cover costs of providing service, not to meet the needs of stockholders located throughout the world.

Please know that Southern Indiana Power will continue to do everything we can to minimize the impacts to you.