Your Power Bill Is More Than a Bill

Farmers manage feed costs, fuel costs, labor and debt. Their electricity deserves the same attention.

Ask a farmer what diesel costs and there's a decent chance they know. I have been told by a farmer that every time they run that generator and burn that diesel fuel, a little bit of their soul dies.

It is expensive. It hurts.

Ask what their electricity rate is?

That's a whole different story.

Between demand side management fees, peak demand charges, basic facility fees and energy usage costs, it all gets pretty confusing. And I am an expert. The way most people deal with their power bill is pretty simple...they just pay it. I don't care whether you own a 16 house poultry farm or a manufactured home. When the bill comes for power, you pay it. If you didn't, the alternative, no power, and by NO POWER I mean, no internet, no phone charger, no lights, no washer, no dryer, no oven, no microwave, shoot...we can't even brush our teeth without our electric toothbrush!

The power bill arrives. It gets paid. Another one arrives next month.

It is an endless cycle, for anyone. But for an energy-intensive agricultural operation, electricity isn't simply a utility bill.

It's a major overhead operating cost.

And unlike many operating expenses, you don't just get to shop around for your electric utility [power company].

So, not only are you stuck paying for it, you don't even get to choose who you are paying for that essential service. But, let's think about what you're actually buying.

Every month, your utility effectively says:

Here's how much electricity you used.
Here's what it costs this month.
Kindly, pay us by this date or you will have to pay a fine and risk getting your power shut off.

So...you pay it.

Then you start over at zero next month.

After 10 years of electricity payments, you aren't any closer to paying off that expense or owning that asset as a result of those payments.

After 20 years?

30 years?

Same story.

That's what makes the current shift in electricity demand so important for Americans, and especially those in agriculture.

Our country is entering a period in which substantially more generating sources of energy and grid infrastructure needs to be built.

At the same time, building most conventional electricity generation sources has become considerably more expensive. Experts at the U.S. Energy Information Administration estimate that a 1-GW combined-cycle natural-gas plant that cost about $722 million in 2022 could cost roughly $2.4 billion under current conditions, citing turbine shortages, materials costs and other pressures. (1)

That does NOT mean everyone's utility rate will automatically skyrocket by a specific percentage. Everyone's utility rate has and will continue to go up, but by how much, now that is the question.

Electricity rates are determined differently by utilities, cooperatives and regulators.

What Drives Electricity Rates?

Electricity rates aren’t determined by one thing. They reflect the combined cost of producing, delivering, and maintaining a reliable supply of power.

Key factors include:

• Supply and demand: When electricity demand spikes—such as during hot summer afternoons—utilities may have to rely on more expensive generation sources to meet peak loads.

• Fuel costs: Natural gas, coal, nuclear fuel, and other generation inputs affect the cost of producing electricity. When fuel prices rise, those costs are passed down and eventually affect customers.

• Grid infrastructure: Power plants, transmission lines, substations, transformers, and local distribution systems require continous maintenance, upgrades, and expansion.

• Rate structures and regulation: Utility rates, demand charges, taxes, fees, and regulatory decisions determine exactly how those system costs will ultimately reach the customer and be reflected in their power bill.

This matters because the rising electricity demand doesn’t just require MORE energy - it requires new, updated, and substantially more infrastructure to generate and deliver it. As data centers, manufacturing, and electrification add new loads to the grid, billions of dollars invested in new generation and grid infrastructure will be required.

For farmers, that makes electricity more than another monthly bill. Instead, it is a long-term operating cost whose future price you do not control.

And that leads to a much more important question:

What will electricity cost your farm over the next 10, 15, or 25 years—and how much of that cost could you control by producing power yourself?

The economics underlying America's electricity system are changing, and we need to pay more attention.

Farmers should start asking a different question.

Instead of:

“What is my electric bill?”

Ask:

“What will electricity cost this operation over the next 10, 15 or 25 years?”

If a farm spends $4,000 per month on electricity today, that's:

$48,000 per year.

At today's price, without assuming a single rate increase:

$480,000 over 10 years.
$720,000 over 15 years.
$1.2 million over 25 years.

And at the end?

You still need electricity.

That's why we call it the "Cost of Doing Nothing."

For a farm, you can't just compare the sticker price of solar to your current power bill, that isn't taking into account the change in the cost of power over time, inflation of the dollar, or the peak demand charges that change on a yearly basis. The comparison isn't simply:

Solar system price vs. this month's electric bill.

It's:

Savings created by producing electricity yourself vs. the long-term cost of continuing to purchase it.

Those are two very different calculations.

Those are two very different perspectives.

(1) https://www.eia.gov/energyexplained/electricity/electricity-in-the-us-generation-capacity-and-sales.php

NEXT: Part 4 —Put the Power Plant on the Farm
What behind-the-meter solar actually does—and why agricultural operations are unusually well positioned to use it.