| Posted in: News Releases
SIOUX FALLS, S.D. - The Missouri River Energy Services (MRES) Board of Directors approved a 5% decrease in its members’ wholesale power supply rates effective January 2022. The rate reduction is projected to save MRES members approximately $8.5 million in 2022.
The rate reduction is possible due to a combination of factors, including lower operation and maintenance expenses at the Laramie River Station, lower debt service due to refinancing, low market prices, revenue generated from the now operational Red Rock Hydroelectric Plant, and market strategies executed to reduce exposure to the energy market.
After the rate decrease is implemented, MRES rates are expected to be approximately 10% lower than the average rate of 12 other comparable wholesale providers in the region. The 2022 rate decrease is in addition to a 3% rate reduction in 2019 and a $17 million refund to the members in December 2020. The December refund was made possible due to lower than projected expenses and equated to 10% of the members’ 2020 power supply bills from MRES.
Based on its long-term cost forecast, MRES also does not anticipate the need for a rate increase through at least 2026. MRES plans to implement time-of-use wholesale rates in 2023, which is expected to be revenue neutral.
“MRES is committed to providing our members with reliable and cost-effective power,” said Tom Heller, president and CEO of MRES. “Now is the right time to lower our rates, and we’re thankful we are in a strong financial position to pass on these savings to our members.”
Even with the rate reduction, MRES projects a debt service coverage (DSC) in excess of 150% for 2022. DSC is an important factor in determining bond ratings. Western Minnesota Municipal Power Agency, the financing affiliate for MRES, is one of a handful of joint-action agencies with ratings in the AA category, which results in better terms and lower costs for generation and transmission projects.
MRES is a joint-action agency made up of 61 member communities in the states of Iowa, Minnesota, North Dakota and South Dakota. Each member owns and operates a locally owned, locally controlled electric system. MRES provides wholesale electricity to its members along with a wide range of energy-related services.
For more information, contact MRES Vice President of Member Services and Communications Joni Livingston at 605-261-3637 or email@example.com.