In our December 2025 edition of the PowerLines newsletter, we notified members that the rates for purchasing power from KEC would increase 7.75% with January 2026 billings. As you likely remember, this increase follows a similar, although somewhat higher, increase in rates (9.7%) that took effect last year at the same time. This is certainly unwelcome news for members, leaving many asking why rates are increasing so rapidly, what does the future hold, and what is the cooperative doing to mitigate them? While much has been shared about these issues in previous newsletters, this article aims to address them afresh and point-blank.
Broadly and bluntly speaking, the causes of these increases lie well beyond our service area, impact the rates of nearly every utility in the nation, and are the product of many factors that are expensive and require years to resolve. Notably, the increasing cost of power is not attributable to a single factor as some are tempted to surmise. For example, some argue that growth in Kootenai County, and within our service territory in particular, is the primary cause of these increases. I’ll explain why this is not the case later in this article. But before doing so, I’d like to explain the many factors that are.
First, power generation stations and the transmission grid are aging. Consider the hydroelectric dams that form the backbone of power generation in the Pacific Northwest: most of these projects were completed between 1938 to 1968, making the youngest of these dams nearly 50 years old and the eldest nearly 100! Check out the table below with a sample of dams for details. Keeping these aging assets in service and viable is expensive and must be recovered through electric rates. Similarly, the more than 20,000 miles of high voltage transmission lines comprising “the grid” within the Pacific Northwest were built between 1940 and 1980. These lines likewise require costly maintenance, upkeep, and in many cases, outright replacement. After all, wood poles, which were primarily used during this era, do not last forever.
Next, consider the capacity of these generation and transmission assets. When originally built, they were sized to meet the forecasted loads they would serve over the subsequent 30 or so years. Most of these assets are now two to three times older than this and the loads now placed on them exceed their original design capacity. Upgrading these facilities to serve that load growth is similarly expensive. So yes, load growth throughout the Pacific Northwest is driving a portion of these costs. But, the load growth experienced within our service area is but a small and insignificant contributor to these pressures.
In fact, KEC’s load represents less than 0.8% of the total firm output of the federal hydro projects managed by BPA. Firm output is the portion of a generating resource’s capacity that grid operators can count on being available whenever needed—especially during peak demand.
Carbon policies of other states also contribute to the rising cost of power. Washington, Oregon and California have all instituted Renewable Portfolio Standards, which utilities operating in those states must comply with. To do so, utilities must incrementally decarbonize the power they use to serve their customers. In turn, many coal-fired generation stations in the Pacific Northwest, such as Colstrip (Montana), Centralia (Washington), and Jim Bridger (Wyoming), are in various stages of decommissioning. The utilities that owned these resources have generally replaced them with solar and wind resources. Regardless of your convictions about how carbon contributes to climate change, the impact the retirement of these plants has had on the cost of power is indisputable. For example, the cost of power produced by coal plants such as these has been reliably less than $40 per megawatt-hour (MWh). Solar and wind replacements, absent federal subsidies, cost nearly twice this. With those subsidies, the cost can be lowered to around $60 per MWh, or one and a half times that of legacy coal.
This leads to another problem that exacerbates the strain already felt. For all practical purposes, electrical power must be produced the moment it is used; it cannot be economically inventoried or stored for future use at the scale needed. By design, hydro and coal generation stations can ramp production up or down to “follow loads.” For this reason they are considered “firm” generation resources. Solar and wind do not share this virtue and only produce power when the sun is shining or the wind is blowing, respectively. As such, these resources require “firming” (or a backup) and the two most frequently relied on resources used for firming wind and solar are hydropower and natural gas. This creates its own host of problems.
First, recall that the hydropower available in our region is aging and in finite supply. Using it to firm solar and wind power diminishes its ability to serve loads continuously. Instead, some capacity must be held back so that it can be called on when the sun sets or when the wind isn’t blowing. This wouldn’t be a problem if the cost of hydropower was the same as that of solar and wind. The truth is, hydropower costs less than half that of solar and wind. In turn, the region ends up paying more for the power produced than it otherwise would.
Natural gas is the other resource customarily used to firm solar and wind. It too is less expensive to operate but produces carbon as a byproduct. In other words, one of the main resources used to firm solar and wind which are needed to achieve the carbon-free policies of these states produces carbon itself.
Secondly, the carbon policies of our neighboring states have led to an electrification of the transportation industry and a decarbonization of commercial and residential space heating. Stated differently, in lieu of using gasoline to fuel vehicles or natural gas to heat homes and businesses, these states have created policies that incentivize the use of electricity instead. As evidence of this, consider how many EVs you see on the road today in comparison to just three years ago. Each of those EVs needs to be recharged and this creates additional load, and strain, on an already strained electrical grid.
Finally, the construction of data centers is frequently blamed for the burdens being placed on the grid. These loads are certainly significant. Asserting they didn’t place strain on the grid or require expensive upgrades to the grid would be disingenuous. However, utilities that serve such large data centers are careful to ensure their other customers are insulated from such costs. While KEC does not have any such loads, we are very mindful of the potential impact and have plans in place to ensure our current customers don’t pay for expensive grid upgrades required by data centers seeking a bargain.
As Kootenai County has grown, so too has KEC. This increased load has primarily been within residential subdivisions. Per KEC policy, those developing these subdivisions are required to pay for the portion of the electrical infrastructure not recovered through current rates over the life of the facilities being installed. For this reason, load growth in our area is not the factor that is contributing to these rate pressures.
Rather, the revitalization of the generation and transmission infrastructure to meet the demands now being placed on the grid is. This revitalization will take years to achieve and will involve considerable cost to complete. These are costs which all utilities in the Pacific Northwest will need to pay for. To do so, each will also need to increase rates over the next several years to overcome these cost pressures. These costs are unavoidable and the product of many factors that cannot be controlled by any singular utility. This isn’t to say that KEC is helpless and unable to influence our destiny. In fact, KEC invests significant time and focus on ensuring our rates remain as affordable as possible and that the continuity of power remains highly reliable. How do we achieve this?
KEC recently joined a consortium of other similar electric cooperatives who jointly develop power generation resources that will be needed to serve loads incremental to the power that the federal dams can produce. While the cost of power produced by these resources will initially be more expensive than that of legacy hydro and coal, it will also be newer and will likely lead to price stability and comparatively lower rates over the long run. Further, this strategy also allows us to spread the risk of asset ownership across a much broader base of utility partners.
We also continue to seek opportunities to secure federal grants to help pay for system improvements where possible. These grants increase the reliability of our system, help avoid future costs resulting from damage and extend the life of the facilities being upgraded. Recently, KEC converted 23 miles of overhead lines to 30 miles of underground lines for $10 million and grant funding covered 90% of those costs. During the recent windstorm we experienced in December 2025, no outages were realized within this project area, reducing the overall cost of the storm that is paid for by all members and allowing KEC crews to focus on other areas that were impacted by the storm. KEC also recently secured a grant of approximately $400,000 to upgrade line reclosing equipment that will bolster reliability systemwide.
There are also steps members can take to help control their costs. Chief among these are investments in energy conservation measures. Reducing the amount of power needed within your homes and businesses remains the best way to keep your individual costs in check. Some members have also elected to invest in solar generation. This is a good investment for some members but not all. Those considering such an installation should conduct thorough due diligence and are encouraged to consult with KEC to understand the potential impact on their power bill. Remember, utility policies change over time and those changes can alter the economics of owning such a system.
In closing, I hope this article helped explain the complex challenges being navigated by the industry and how those challenges are creating rate pressures for all customers in the region which will likely persist for many years to come.
A Helpful Analogy:
A farmer has an old truck they’ve used to tend to their farm for decades. While it’s not very fuel efficient and burns a little oil, it’s been reliable, required limited maintenance, and it’s paid for. The truck now needs a new engine and transmission. The bed is rusted out. It needs new tires. After many decades of reliable service, the truck reached the end of its useful life. A new truck is now needed. The new truck is more fuel efficient and will serve the farm’s needs well into the future. But it will also cost an additional $900 a month in principal and interest payments. Insurance and property taxes will also be higher. Just like the farmer investing in a new truck to keep the farm running smoothly for decades to come, upgrading the generation and transmission system is essential to ensure reliability, efficiency, and sustainability for the future. While the upfront costs are higher—much like the truck payment—the investment pays off in improved performance, and the ability to meet growing demands.
- Power supply costs are increasing for the electric utility industry as a whole—not just KEC. These rate pressures are expected to continue for several years.
- The regional generation and transmission system is aging and requires costly upgrades.
- Solar and wind are expensive and require backup, such as hydro and natural gas, which adds to the cost.
- Carbon policies in other states limit coal use but encourage EVs and electric heating, which increase the demand for electricity.
- KEC does not currently serve large data centers and has policies in place to prevent members from bearing the cost of grid upgrades required by such high-demand facilities.
- KEC’s growth has mainly come from residential subdivisions, but developers cover the infrastructure costs beyond what rates recover, so local load growth is not driving current rate increases.
- KEC is partnering with other cooperatives to develop new generation resources for long-term price stability and reliability, while also securing federal grants to fund system upgrades.
- The best way to save on your bill is to use less energy. Solar can help some members, but it’s important to do your homework and talk to KEC first.