MVEC is a distribution cooperative, meaning we distribute (or deliver) electricity to our members. The actual production (or generation) of electricity is handled by two wholesale power providers who transport electricity through high voltage transmission lines interconnected throughout the State and other parts of the United States. MVEC’s wholesale power providers, Basin Electric Power Cooperative (BEPC) and Great River Energy (GRE), have a diverse mix of generation resources.
Generation of Electricity
Our wholesale power providers supply MVEC and other cooperatives in the region with electricity primarily generated from coal. Other sources for producing electricity include nuclear, gas, and oil, as well as renewable energy sources such as wind, hydro, biomass and solar. All the energy from generation is delivered into the transmission grid.
Delivery of Electricity
MVEC receives the generated energy from the transmission grid at its 25 substations throughout our service area. An electrical device, called a transformer, reduces the power to distribution levels (7,200/12,470 volts) at the substations and then to lower (120, 208, 277, or 480 volt) voltages at the member’s property for use in schools, farms, small businesses and homes.
Understanding Wholesale Power Costs
Wholesale power is one of the largest cost components on the member’s electric bill. It represents over 70% of MVEC’s costs. MVEC purchases this power from BEPC and GRE.
The remaining 30% of the cost is for MVEC delivering reliable and affordable electricity to your home. This covers the cost of the cooperatives $100+ million investment for plant, operation and maintenance and general and administrative expenses.
Although MVEC’s local delivery costs are expected to remain flat, the cost of wholesale power is forecasted to continue to increase for at least the foreseeable future. Wholesale utility costs affect everyone industry-wide, including other cooperatives, municipals and investor-owned utilities. The cooperative difference as a non-profit organization is that MVEC strives to recover only its costs, and any margins are returned to members as Capital Credits.
What is causing wholesale power costs to increase?
- Lack of load growth due to a weak economy
- Lower sales of surplus energy to other utilities, resulting in less revenue
- Costs in building and maintaining generation and transmission infrastructure. To learn more visit CAPX2020.
- Costly renewable energy requirements and government mandates. To learn more visit Our Energy Our Future.
Members can help keep retail energy costs down by participating in Energy Wise Programs and making more energy-conscious decisions. Visit energy tips and Energy Check to learn how to manage and monitor your energy usage.
