The forecast is the basis for setting rates and determining financial requirements.
Basin Electric Power Cooperative
- August 25, 2012
Basin Electric’s long range financial forecast for 2013-2022 was adopted by the board of directors in August. This document is the basis for setting rates and determining financial requirements.
Dave Bangen, Basin Electric’s manager of financial planning and forecasting, explains that whenever a 10-year financial forecast is completed it is important to evaluate what has changed in the forecast.
He said there are three major moving components: 1) Cost of service is increasing from $1.3 billion up to almost $1.8 billion, 2) Non-members sales are shrinking because members are using more of their resources, so that will be a very small component by the end of the forecast, and 3) Member sales are increasing.
“If you look at just 2013, our member revenue requirement went up $76 million,” Bangen said. "Some is due to cost increases; some is less revenue from non-member sales, but the good news is member sales in 2013 went up 1.3 million megawatt-hours (MWh). That almost entirely offsets that increase. So, yes our revenue requirement is up, but our member sales are increasing as well.”
Bangen also noted an interesting side study done in the forecast. “We did another forecast as if the Bakken load wasn’t there and determined what the impact would be on the membership. If you remove the Bakken load, the member revenue requirement will go down from $75 million in the early years to almost $400 million in the later years, but the member sales also shrink from 3 million MWh in the early years to almost 6 million MWh in later years. So if we didn’t have the Bakken load, our average member rate would be at least 4 mills higher in the early years.
“So the good news is that we have much higher load, not just in the Bakken, but throughout the region and that is helping to offset our member revenue requirement increases,” Bangen said.