by Brad Dolinski, CEO
Good afternoon North Itasca Electric,
It seems like I blinked, and the year is over. I hope everyone has their holiday plans and shopping wrapped up. I’ll be heading up to Baudette to see family and friends this weekend. I don’t believe we’ll be heading to the lake anytime soon. I am cautious when it comes to early ice. I enjoy this stretch of nice weather we have, although many of my friends’ businesses depend on the cold weather. Between our loggers, resort owners, cold weather testers, bars and restaurants, I think we need some cold and snow to keep our economy going.
We have been busy planning for 2024. What will the year shape up to be? What projects are we going to focus on? Where will we be clearing the rights of way? How much will interest expenses be for our loans? What does the cost of power look like, and what will the impacts of all this be to you, the Member-Owner?
We are looking at several projects for 2024. Horseshoe Lake near Marcell will be a focus this year. We have been working on lines that have continued outages on them for the past few years. Can we replace these lines, improve safety and reliability, and reduce costs by replacing them? These have been our planning goals when we consider projects. Some of the projects we would like to focus on are limited by regulations and environmental concerns. We continue to look for ways to work within the permitting requirements to improve the system. Some of these projects will take a little longer to finish due to the permitting requirements.
Right of way clearing will continue west of the Hwy 6 corridor. We basically finished along 29 and 14 in 2023. The next section will continue traveling south down to the Bowstring, Sand Lake, Dunbar, Dixon Lake, and Jesse Lake areas. We have been making a concerted effort to clear our right of way, ground to sky, twenty feet on both sides of the overhead single-phase lines.
North Itasca Electric borrows money from the federal government under the USDA Rural Utilities Service primarily. We can get lower interest rates, close to U.S. Treasury posted rates using this program available to us. Over the past 18 months we have seen a climb in interest rates. Our business model is built around borrowing money. When interest rates climb as we have seen, pressure is placed directly on the rates we pay per kilowatt hour. I am expecting to see interest rates on new loans climb to roughly 5% up from 1-2% just a couple years ago.
I wrote two months ago about the expected rate increases we are going to see from our power supplier Great River Energy. I am expecting to see our cost of electricity rise by 2.4% in 2024 from GRE. The power cost is 50% of our total budget at North Itasca. This means we must increase the cost of power on your bill by 1.2% to manage the increase from GRE.
Our Board of Directors carries the heavy weight of approving rate changes. It is my job to ensure they have all the information necessary to make the best financial decisions for North Itasca Electric. I will continue to work with our budget to find the least impactful way to navigate the challenges faced in 2024. We will discuss these opportunities internally and with our auditors to ensure we have the best possible path to move forward.
This isn’t the news I wanted to drop on you around Christmas. If you have spent any time around me or reading my articles, I want to ensure you have the information I have early. I don’t expect big rate increases in 2024. I will commit to recommending a 1.2% rate increase. I must do this to avoid larger increases in the future. I would prefer small increases when they are needed rather than a big bite all at once.
I want to give a huge thank you to Mr. Jerry Loney. Jerry has spent many years serving the Member-Owners of North Itasca. He has built friendships with many of us in the area. I will miss his sense of humor (when I could hear what he said), and his devotion to all of us. Jer, I wish you the best, I look forward to hearing how great retirement is when you stop by to visit. Thank you for your years of service and your friendship, sir.
Cheers to a Merry Christmas and a Happy New Year.
By your side! Miigwech
Brad
