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February 1, 2017

Dear Member:

No one wants to pay more for electricity than they have to. It is important to know that you, as members, are getting a good value for the electricity you pay for.

At High West Energy (HWE), we have always been committed to delivering reliable power to our members in a way that maintains affordable prices. This letter will help you understand the 2017 rate increase. As you review the notice, you will see our various classes are being impacted differently. This is due to our analysis showing some classes provide adequate revenue; therefore, some classes will not see as much of an increase this year and others will see a more significant one.

There are two factors that are driving the rate increase. The first is an increase in power supply costs from our power supplier. With a different Administration at the federal level, we may be in line for some regulatory relief, but it is too early to predict how that will influence retail rates in the future. For now, our costs continue to increase. Another reason for the 2017 increase is that we are accelerating depreciation on an old metering system that we are in the process of replacing. The accelerated depreciation expense will be in effect for the next three years. After 2019, we will have the old system completely written off and can fall back to a lower depreciation expense on these assets.

High West Energy realizes that rate increases create hardships in many member households and we have looked at our budget and reductions have been made. On December 12, 2016, after much deliberation and analysis, the HWE Board decided to increase revenue by 5.5% to cover these cost increases. The attached notice is a standard form that shows how the increases will affect each rate class, effective March 1, 2017.

When compared to the dozen electric providers that surround our service territory, High West Energy is one of the lowest for an average residential or farm account, even after the increase.

In the past few years, your cooperative has significantly increased our maintenance of lines and substations. It has been a goal of the cooperative the past few years to not only increase our maintenance activities but to also lower our operating costs per kWh sold. We are committed to ensuring a good value for your money and intend to do all we can to continue our attention to fiscal

Conservativeness, and to systems/processes improvement. Even so, when we look at HWE's operating costs per kWh sold; we are below the national average for cooperative utilities.

Interestingly, some of our expenditures which at first glance seem questionable, actually have a positive impact on our cost structure. Examples include upgrading our trucks, tools, and equipment. The return on this investment has increased productivity of our crews by over 50%. Also, our crews are safer than they have been in the previous years.

Please know that increasing rates is something the HWE Board and staff do not take lightly. I hope that you do not think we are any less serious about being able to provide you with affordable electric service because of this increase. Even though it is primarily due to the increase in our wholesale cost of buying power, you still write the check. In our budgets, it all adds up. Please know what we strive to ensure the rates charged are fair and most importantly, at the lowest cost. However, we also have a responsibility to keep your cooperative financially stable and operating at the high standards you’ve come to expect, now and in the long-term.

Your cooperative does offer some options to help you manage your energy bill if you have the need. Those services include automatic payments options, budget billing, and energy efficiency programs. We can also visit over the phone or in-person to give you tips and advice to help lower your energy usage.

Sincerely,

HIGH WEST ENERGY, INC.


Brian Heithoff

CEO/General Manager

Touchstone Energy Cooperative Logo

Headquarters Pine Bluffs - 6270 County Road 212 • PO Box 519 - Pine Bluffs, WY 82082