By Bryan K. Mathews and Donna Walker
Record high inflation, supply chain disruptions and the war in Ukraine are having a dramatic impact on our costs to supply electricity. Specifically, natural gas, coal and power costs represent 35-40% of Southeastern Indiana REMC’s annual operating costs. In less than a year, these costs have increased 150% 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.
Southeastern Indiana REMC and Hoosier Energy are both non-profit organizations owned by those we serve, including you. Hoosier Energy generates and transmits electric power, and Southeastern Indiana REMC distributes the power to homes, farms and businesses.
Both of our cooperatives have reviewed plans and budgets and have taken action to postpone projects and reduce costs while not jeopardizing reliability of the system.
The global nature of these challenges makes it 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.
Please know we will continue to do everything we can to minimize the impact to you. You can help minimize that impact by taking action to reduce electricity consumption. Turn off lights. Adjust your thermostat a little higher this summer. Consider a smart thermostat if you don’t already have one.
Southeastern Indiana REMC also has several programs to help you optimize your energy consumption. Please call or visit our website to learn more about these programs.
BRYAN K. MATHEWS is general manager of Southeastern Indiana REMC. DONNA WALKER is president and CEO of Hoosier Energy.
Frequently asked questions: Increased costs and rates impact
What happened? Beginning last fall, global energy costs have risen dramatically due to inflation, supply chain issues created by the pandemic, and most recently, the war in Ukraine. This resulted in the most volatile period the energy industry has experienced in 20 years.
Who is to blame? There is no single group or person to blame. This is a result of global supply and demand which are being significantly impacted by the war in Ukraine.
Where is the money going? Southeastern Indiana REMC and Hoosier Energy are both non-profit organizations owned by those we serve, including you. Natural gas producers and suppliers are benefitting from the higher prices due to increased demand and limited global supply. The Federal Energy Regulatory Commission oversees natural gas and power markets prices.
What are you doing to cut costs? We have reviewed our plans and budgets and are postponing projects and expenses that can be put on hold without negatively impacting reliability.
How long will it last? It’s impossible to predict how long this will last, but we expect the volatility and increased costs to continue for the foreseeable future, possibly the next few years.
Why were you not prepared for this? We have always prepared for volatility, but no one could accurately predict the impact of the war in Ukraine or the sudden global demand for coal and natural gas.
What can I do to reduce this bill? Turn off lights. Adjust your thermostat a little higher this summer. Consider a smart thermostat if you don’t already have one. We also have several programs to help you optimize your energy consumption.
