| Resource Type | Research Report |
| Author / Source | Cara Goldenberg, Kaja Rebane, Gennelle Wilson, Xavier Zheng (RMI) |
| Publication Date | 2024 |
| Location | United States |
| Initiative Type | Policy, Program, Partnership |
| Project Complexity | Intermediate |
| Recommended For | Board, Staff |
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Estimated reading time: 30+ minutes
Why This Matters for Rural Electric Co-ops
Rising electricity costs are increasingly driven by capital investments, fuel volatility, and infrastructure expansion, and these pressures are only going to grow. Transmission and distribution spending doubled as a share of total utility costs between 2003 and 2023, and one in four US households already struggles to pay energy bills.
This report gives co-op boards and staff a practical framework for evaluating investment decisions, reducing unnecessary cost escalation, and protecting long-term member affordability. It also equips co-op leaders to ask better questions of their G&Ts and power suppliers about how costs are being managed and controlled.
Key Takeaways
| › | Electric system costs are rising due to infrastructure investment growth, natural gas reliance, extreme weather, and slow adoption of cost-saving technologies. These pressures are structural and expected to intensify. |
| › | Traditional utility regulation can create incentives to spend more rather than less. Boards and staff who understand these incentives are better positioned to ask the right questions and push back. |
| › | Transparent planning and competitive procurement consistently surface lower-cost options that utilities might not otherwise consider. |
| › | Tools like fuel-cost sharing, economic dispatch requirements, and careful oversight of capital cost trackers can meaningfully reduce what members pay. |
Implementation Considerations
- Regulatory or Governance Considerations: Co-op boards can adopt internal policies for investment review and cost oversight that mirror the regulatory mechanisms in this report, including standards for evaluating G&T cost pass-throughs and expectations around competitive procurement.
- Staffing or Technology Requirements: Applying this framework may require financial modeling expertise most distribution co-ops don't have in-house. Smaller co-ops should plan to rely on external advisors or statewide association resources.
Notable Examples
- Dominion Energy Virginia: Rate adjustment clauses made up an average of 22% of a typical residential bill between 2021 and 2023, illustrating how capital cost trackers can shift risk to ratepayers while weakening cost-containment incentives.
- Florida Power & Light and Duke Energy Florida: Both passed hundreds of millions in unexpected gas costs to customers after Winter Storm Uri, resulting in 15-18% residential bill increases.
- PG&E (California): Wildfire-related costs grew 117% in a single year, reaching 24% of total revenue requirements, showing how climate-driven costs can rapidly overwhelm affordability.
View Full Document Requires name and email to access
Estimated reading time: 30+ minutes
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