Rate FAQ
In 2026, the primary driver of the increase is the cost of wholesale power. The budget assumes an increase in wholesale power cost expense of more than 10% in 2026. The wholesalers have indicated that, to maintain reliability, they need to make significant investments into new infrastructure (generation stations, transmission lines, substations…). This buildout is expected to be a multi-year effort so additional rate pressure in future years is certainly possible.
It is important to note that the wholesale suppliers have taken steps to ensure that they insulate our membership from the impact of large load growth. The large loads making appearances in the news lately have primarily been data centers. They, along with other large loads, will be required to pay for any infrastructure needed to serve their loads to ensure that the rest of the membership isn’t asked to pay for those resources.
Over the years, the primary drivers of the costs that Capital Electric experiences have changed. As the need for additional revenue arose, it was determined that we should take steps to align our rate structure more closely with our cost structure so we can focus on member rate equality.
-
- Why was the Grid Capacity element implemented?
The distribution grid that Capital owns/maintains to deliver the power to nearly 23,000 electric services has a cost that exists regardless of how many kilowatt hours are sold. The grid is designed and built to be able to deliver the highest level of power needed by the member (even if that highest point of need only occurs occasionally). This charge collects revenue proportionate to how much of the power grid the member needs. It seems fair this method was superior to a flat, fixed monthly base charge that doesn’t consider the wide diversity within our membership. When we talk about “the grid” we are referring to the poles, wires/conductor, transformers, meters and other components that deliver the power from the substation to your home or business. Keep in mind that this isn’t as simple as just the line from your home to the “main line”. Each member shares in the backbone infrastructure from the substation to their home.
-
- Why was the On-Peak Demand charge implemented?
It may surprise you to know that more than half of our wholesale power costs come from a single, half-hour period each month. In fact, those 6 hours per year account for approximately 40% of Capital’s overall costs. That exceeds what we pay for energy (kWh). To account for this fact, the On-Peak Demand charge was implemented to match the costs relating to that on-peak period to what the members are using during that time each month.
We have a wide variety of strategies that can help. The best place to start is to navigate to the “Opportunities to Save” page on our website. https://capitalelec.com/opportunities-save
-
- How much does the On-Peak Demand charge cost the average residence?
In the first six months since implementation (May through Oct.), the average On-Peak Demand was 2.29 kW which, on the 2024 rate, led to a charge of $2.86. In 2025, the dollar amount, on average, will be $11.45.
-
- How much does the Grid Capacity charge cost the average residence?
In the most recent six months (May through Oct.), the average Grid Capacity kW was 9.12 which amounts to $18.24 per month. That amount will remain constant in 2025 as the rate is not changing
As we introduced the On-Peak Demand component of the bill, we knew some of our members would want to do what they could to offset those costs. One way is to let members know when there is a high probability of a peak being set so that they can take action to reduce usage if they desire to do so. Since we don’t know when the peak is reached until the following month, we use historical data and predictive analytics to identify when the highest probability of peak times arises. While we can’t guarantee that we will catch every peak, these notifications have a long-term success rate of 85%. On average, there are 3 events each month for about 10.5 hours. Members who want to be more certain they operate off-peak can consider our load control program or other opportunities to save https://capitalelec.com/opportunities-save
-
- Are you paying the On-Peak Demand charge for all time periods for which a notification is sent?
No. There is a single, half-hour period each month that determines the bill.
-
- Why are there more peak notifications during the worst times?
Peaks have traditionally been driven by two things. The first is the weather. The hottest days in the summer are when the AC is working hardest, and the coldest days of the year are when the heating systems are pulling the most energy. The second is uniform behavior. Many members follow a similar daily pattern. They get up and get ready for the day and then head off to work or school. Similarly, they come home at the end of the day and prepare a meal and use other appliances. Peaks occur when demand is the highest and supply is constrained as a result.
-
- Why can’t we send peak notifications to members who are on the heat rate program?
The discounted heat rate is provided by one of our wholesale providers, Basin Electric. One of the rules in the program is that we cannot send direct notifications to participants, but we are allowed to send out general notices. If you are a heat rate participant and would like to still be aware of the notification periods, please watch our Facebook page.
As a not-for-profit electric cooperative, there is no incentive to maximize margins. The operating margins for the last two years have been $480 and $129 respectively (these are the margins without capital credit allocations from the wholesalers). While we do have to meet loan covenant ratios to comply with our lender contracts, there is no other reason to pursue margins.
We want to provide the fairest rate structure possible and one that provides the most accurate price signals to members. If we embed costs into a component that doesn’t correspond to the units being used to assess the charge, we aren’t achieving either of those objectives.
Capital Electric’s rates are set by the Board of Directors. These nine members, who are elected by the membership, pay the same rates that they set for the overall membership. Because of this democratic structure and the fact that achieving a return for shareholders is not necessary for a cooperative, the legislature has not required PSC oversight of cooperatives.
While we recognize that social media is a wonderful mechanism to share thoughts across groups of people, we do encourage our members to consider the source and reasonableness of what they read online. If a concern arises, please don’t hesitate to reach out to our office, as we will be happy to answer your questions.