Lake Country Power is raising 2007 electrical rates for about 41,000 customers in parts of eight Northeastern Minnesota counties.
Increased costs for wholesale power, fuel, labor and employee health-care coverage are forcing the Grand Rapids-based electrical distributor to increase rates, Bob Bruckbauer, chairman of the Lake Country Power board, said Thursday.
The temporary closure of Ainsworth Lumber Co.'s oriented strand board plant in Cook -- the cooperative's largest industrial user -- also is affecting residential rates.
"This is probably the last thing we want to do," Bruckbauer said. "But where we are right now is facing all the challenges we have and having it eat up our revenue."
It's the fourth consecutive year that the cooperative board has decided to raise rates.
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A customer who uses 800 kilowatts of electricity per month would see their monthly bill increase by about $7.15, according to the cooperative.
That compares to a $7.10 per-month increase last year for the same usage, $4 in 2005 and $2 in 2004.
The increase would result in a 7.3 percent annual revenue boost to the cooperative.
Lake Country Power customers could see rates stabilize in future years , said Rick Lemonds, Lake Country Power general manager.
If the cooperative secures power contracts with one or more of several major economic development projects proposed across the Iron Range, residential rates could level off in future years, Lemonds said.
"Next year, we are expecting significant price increases from our power supplier," Lemonds said. "Any of these projects that we have a chance to get are not going to help us next year, but any of the projects and other businesses that could come with something like a steelmaking plant would help us spread our costs over our sales."
Wholesale power costs in 2007 are expected to increase by $2 million over 2006, when the cooperative will spend about $28.4 million to buy power from its supplier, Great River Energy.
Ainsworth's Cook plant accounts for about 10 percent of the cooperative's annual sales of 630 million kilowatts.
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With the temporary closure and energy conservation patterns by cooperative members, kilowatt sales probably will remain flat until the OSB plant re-starts, Lemonds said.
Beginning in January, cooperative members will see increases in rates for general service, the Energy Wise program and a monthly facilities charge. A higher per-kilowatt rate will again be charged in the summer, when electrical usage peaks.
Lake Country Power has offices in Grand Rapids, Kettle River and Virginia.
LEE BLOOMQUIST can be reached weekdays at (800) 368-2506, (218) 744-2354 or by e-mail at leebloom@cpinternet.com .
