CEO Message - February 2026

Part of the mission of People’s Energy Cooperative (PEC) is to ensure fair and reasonable prices for the services we provide. Unfortunately, since the
COVID pandemic, costs have risen sharply and the need to build, maintain, and repair the electric system continues.

From 2021 to 2024, the cost of many electric utility products, on average, increased by about 48%. In the last five years alone, the cost of underground transformers went up as much as 300%, overhead transformers 175%, wiring and cable 70-130%, and labor (with benefits) 22%.  Their compounding effect continues to shape how we plan, budget, and operate on your behalf.

In addition to replacing damaged infrastructure from extreme weather events (which are not covered by insurance), PEC, similar to many other utilities,
is strategically making long-term investments to strengthen our electric system. These investments include a focus on advanced monitoring technology
that supports observing the electric system’s health and enhances maintenance strategies, along with rebuilding existing infrastructure with modern
material and design standards. These types of investments could render a higher cost in the short term but ultimately reduces the risk of catastrophic
damage and the overall long-term costs in the future.

Another cost impacting factor for PEC has been converting the voltages of equipment in the communities we acquired from Alliant in 2015. We have converted Eyota and are in the process of converting Elgin and Planview. Converting to one voltage across PEC’s system minimizes operation
and maintenance expenses while enabling us to reroute electricity from nearby equipment to minimize or avoid outages. These increased options
will help reduce overall outage times members in these areas could experience in the future.

As we prepared our financial forecast for 2026, these industry wide pressures signaled the need for a 3% increase in revenue to maintain the reliability and service you expect. The good news is that our cost-control efforts—combined with more favorable wholesale power prices than projected—enabled the revenue adjustment to be closer to 2%. This is a direct reflection of our commitment to careful planning, reducing some costs, and making prudent investments in the system that serves you every day.

The exact impact on rates will depend on the results of our current cost of service rate study, which provides a detailed, data-driven look at how costs are distributed across rate classes. Once those results are finalized, we’ll communicate the rate increases needed to ensure we meet the revenue requirements. New rates will go into effect beginning with May usage.

We understand that a rate increase may be concerning. Thank you for your trust and engagement as we work through these industry-wide challenges with transparency and care.