Navigating the Rising Costs of Wholesale Power

Transparency in Billing: Why the Power Cost Adder Fluctuates

Transparency is a core value of your member-owned cooperative. We believe that when you understand the factors influencing your monthly bill, we are better able to work together to manage our energy future. Today, we want to share an important update regarding the Power Cost Adder (PCA) line item on your bill.

The Foundation: Our Cost of Service Study

In February 2025, we concluded a comprehensive Cost of Service study. The purpose of this study was to ensure our base rates were set accurately to cover the local operations, maintenance, and infrastructure of our grid. At that time, we used the best available data to project the cost of "wholesale power"—the electricity we must buy from our supplier, Southern Illinois Power Cooperative, before delivering it to your home.

Based on those projections, our Board of Directors approved a base rate adjustment that took effect on July 1, 2025. This was a necessary step to maintain the reliability and safety of the service you expect from Southern Illinois Electric Cooperative.

The Shift: A Volatile Energy Market

The energy landscape can change rapidly. In November 2025, our wholesale supplier notified us of a rate increase to be effective January 1, 2026, that exceeded the projections used in our February study. External market pressures, including fluctuating fuel prices and national grid demands, have driven the cost of wholesale electricity higher than anticipated.

Because the PCA is designed to bridge the gap between our "projected" wholesale costs and the "actual" costs we are billed, the increase from our supplier means that the PCA on your bill will reflect a higher difference than it did previously.

A Two-Way Street: Credits and Adders

It is important to remember that the PCA is not always a charge; it is a balancing mechanism.  When the actual cost of wholesale power is lower than our study’s projections, the PCA becomes a credit (a reduction) on your bill.

For example, in January 2024, our members received a credit because wholesale costs were lower than anticipated. However, as many of you have seen in the news, the energy industry as a whole has faced persistent upward pressure on prices. Because of these rising costs, it has been some time since market conditions allowed for a credit. Whether it is a credit or an adder, the goal remains the same: ensuring you pay the exact cost of power, with no surplus kept by the Cooperative.

How the PCA Works: Agility and Accuracy

You might wonder why we use a Power Cost Adder instead of simply changing our base rates again. The PCA is a protective, transparent tool that ensures you pay only the true cost of power:

• Monthly Adjustments with a One-Month Lag: We review and adjust the PCA every single month. To ensure absolute accuracy, we use a "nearly real-time" calculation. This month’s PCA is calculated based on the actual wholesale costs from the previous month. This ensures your bill is always rooted in verified data, even if it appears one billing cycle later.
• A True Pass-Through: The PCA functions as a dollar-for-dollar pass-through. Southern Illinois Electric Cooperative does not retain any of these funds; every cent collected goes directly to pay the power supplier for the energy you used.
• Market Responsiveness: Unlike fixed base rates, the PCA is flexible. Because we adjust it monthly, we can react to volatility quickly. If wholesale power costs decrease next month or next season, the PCA allows us to pass those savings back to you immediately without a lengthy base rate adjustment.

Looking Ahead

Our management team and Board of Directors remain vigilant, monitoring energy market trends daily. We are committed to fiscal responsibility and will continue to advocate for the best possible wholesale prices. As a not-for-profit entity, our priority is not to generate a profit, but to ensure the lights stay on at the most fair and transparent price possible for every member-owner.

We thank you for your continued support and for being a valued part of the Southern Illinois Electric Cooperative family.