The increasing sum of our parts

If you tried to build a home a few years back you know rising material prices can take a painful chunk out of your bottom line.

The COVID-19 pandemic drove demand for new homes skyward. Shortages of critical home-building supplies such as lumber and PVC pipe led to backlogs and price spikes, pushing construction costs through the roof.

We're now seeing similar trends play out in the energy industry.

Over the last few years, we've seen a drastic increase in the price, demand and wait time for the materials needed to bring electricity to your homes. The cost of power line material has risen nearly 70% since 2019, according to CEEUS, our material supplier. Just looking at a few important parts of our power delivery system - distribution cable, crossarms and transformers - will give you an idea of the challenges we're facing.

A spool of cable that runs from our substation to your neighborhood currently costs $4,244, an increase of 70% since 2019. Transformers, which step down the voltage of electricity so that it can safely power your appliances, have seen an even greater jump. Underground transformers have nearly doubled in price over the past five years, to $2,407 from $1,283. Overhead transformers aren't much better, rising to $1,360 from $874. A single crossarm - the horizontal bean at the top of a power pole that holds the cable and other equipment high in the air - has risen in price to $93 from $42.

These are critical pieces of equipment along the 7,380 miles of line Blue Ridge maintains to provide you safe and reliable electricity. We can't wait for Amazon Prime Day to purchase them at a discount, nor can we expect next-day delivery. In fact, supply chain challenges have extended that wait times for some of these materials to more than two years.

Other inflation factors such a commodity prices (aluminum, copper and rubber), transportation and interest rates have a big impact as well. It all means high demand, short supply and rising cost for materials we can't do without.

Fortunately, we have an important partner to help us during the inflation crisis. Decades ago, South Carolina's electric cooperatives pooled their resources to form CEEUS, a member-owned materials and supply cooperative that allows us to purchase materials at a much lower price than if we had to do it alone.

Perhaps the next time you look at a power line, you'll see it a little differently - as the sum of parts that are increasingly expensive. If not, that's OK. Just know that Blue Ridge is doing everything it can to soften the impact of these rising costs.

 

Jim Lovinggood

President and CEO