January 2026 CEO Column

Happy 2026! I hope you had the chance to celebrate a happy and safe holiday with friends and family.

I’d like to start the month by providing an update on progress we’ve made and the remaining timeline regarding the upcoming rate adjustment. 

The Class Cost of Service Study (CCOSS), which was approved in October by our Board of Directors, is still underway. As communicated in a previous newsletter, the purpose of the study is to determine the amount of revenue we’ll need to cover future operational costs and ensure our rates stay fair and equitable across all member classes (i.e., residential/farm and commercial).

One of the first steps was to look at what it costs to deliver electric service to our members. As with other co-ops, our wholesale power costs—which account for almost 65% of our current operating budget—will see an increase this year. This increase is driven by investments in upgrades to an aging infrastructure and new transmission projects to handle future demand and satisfy carbon-free standard requirements. Also considered were LREC’s controllable costs including staffing to perform daily operations and costs to support long-term system reliability.

It’s important to note that, while controllable costs can be adjusted—unlike remaining budget items that are uncontrollable such as taxes or interest—any cuts in these areas could potentially affect our quality of service. View the graphic below for a complete breakdown of where your energy dollar goes.

Once established, the study focused on allocating the total cost to each member class based on their usage to determine the amount of revenue needed from each and develop recommendations for the upcoming rate adjustment. 

LREC’s consultants presented rate adjustment options during the December Board meeting, and will return for the January Board meeting later this month where a final decision by the LREC Board Directors on the official rate schedule is expected. Want more details? A step-by-step guide to the CCOSS is illustrated below this article. 

Although how this adjustment will be applied has yet to be determined, please know that we are committed to providing timely information. 

Transparency goes a long way toward calming uncertainty. Please do not hesitate in contacting me with any questions/concerns; I look forward to helping in any way I can.

Cooperatively yours, Joel Janorschke, CEO