Membership Matters
Jan 2004
Blue Ridge Electric Retains Morgan Stanley Capital Group for Wholesale Power Needs
After concluding an in-depth whole-sale power cost and supply study, the board of directors of Blue Ridge Electric has announced an agreement with Morgan Stanley Capital Group, Inc. to begin managing their wholesale power contracts and power supply resources effective January 1, 2004.
“Our goal in this study was to better stabilize rates for our members and curb rising wholesale power costs that were affecting our cooperative and its members,” explained Doug Johnson, chief executive officer of the cooperative. “After a lengthy study with consultation from one of the nation’s leading power supply consultants and one of the most respected legal advisors to the industry, we determined our wholesale power needs could be met most efficiently through Morgan Stanley Capital Group.”
The cooperative’s new contracts through Morgan Stanley Capital Group will help manage wholesale power costs. While this doesn’t prevent future rate increases, the new contracts help Blue Ridge Electric provide members with more stable rates than would have been possible under the rate forecast from its former wholesale power supplier, North Carolina Electric Membership Corporation (NCEMC).
The change in wholesale power providers didn’t, however, produce enough savings to recover an increase of $7.2 million charged annually over the past two years to the cooperative for wholesale power from NCEMC. To recover this expense, the wholesale power cost adjustment (WPCA) you’ve seen on your monthly bills will be folded into the co-op’s base rate and an additional 1.91 percent overall increase in retail rates will go into effect in February. The WPCA, which is an adjustment used as necessary to reflect fluctuating wholesale power prices, will be at or near zero with this change.
The rate increase means that the average residential member using 800 kilowatt hours of electricity per month would see a $1.80 increase in their monthly bill. Members who have accounts other than residential will receive separate notification of their change.
Blue Ridge Electric announced the change in wholesale power suppliers in January along with three other North Carolina electric cooperatives that will also now be served by Morgan Stanley Capital Group: EnergyUnited, Piedmont Electric Membership Corporation, and Rutherford Electric Membership Corporation. The four co-ops will remain independent members of NCEMC to fulfill former contractual obligations that remain over the next few years, including a long-term contract to receive power from Catawba nuclear station.
“As we strive to serve our members with the best customer care and value available, this move allows us to achieve more stable rates and to better manage our power supply for the benefit of our member-owners,” Johnson added.
Morgan Stanley Capital Group will also provide the cooperatives with energy related risk management services for fluctuating natural gas prices and other market factors that have led to increasing wholesale power prices the past few years.
Morgan Stanley Capital Group is a direct, wholly-owned subsidiary of Morgan Stanley, a large and diversified global financial services firm. It is also an active participant in global commodities markets, including electricity, natural gas, petroleum, and base and precious metals. In 1994, Morgan Stanley Capital Group received authorization from the Federal Energy Regulatory Commission to buy and sell electric power in the wholesale market at competitive rates. Since then, Morgan Stanley Capital Group has been an active participant in US energy and power markets, providing physical power supply and power system management under competitively priced long term contracts as well as energy-related risk management services to clients throughout the United States, as well as
globally.
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Members Only News
-For Members of Blue Ridge Electric
Resolutions Due
Members may now submit proposed resolutions for consideration of presentation at the 2004 Annual Membership Meeting.
Proposed resolutions should state their relevance to the cooperative’s mission, objectives, operations, and how they relate to the membership.
Resolutions must be in writing and received by 5 p.m., March 26, 2004. Address resolutions to Doug Johnson, PO Box 112, Lenoir, NC, 28645.
Proposed resolutions are reviewed by the Resolutions Committee for compliance with policy. Recommendations for resolutions to be presented at the annual meeting are made by the committee to the board of directors at their April meeting.
The Resolutions Committee is composed of chairpersons of the cooperative’s district Member Advisory Committees and members of the board of directors’ Policy and Member Relations Committee.
The Perspective
An Editorial by Chief Executive Officer Doug Johnson
Stabilizing Rates
Since the cooperative first began experiencing consistently rising whole-sale power costs in late 2001, I’ve updated you through this newsletter. After a thorough study of how we might better control our power supply costs while ensuring reliable power, I am pleased to tell you that we now have a solution that will benefit members now and into the future.
Your board of directors has approved a new wholesale power supplier to meet the power needs of our membership. Morgan Stanley Capital Group, Inc. will become our new wholesale power supplier starting January 1, 2004. While you may be more familiar with Morgan Stanley as a financial services firm, its subsidiary, Morgan Stanley Capital Group, is one of the most highly respected power suppliers in the nation.
In managing our wholesale power supply contracts and resource needs, Morgan Stanley Capital Group has been able to offer more stable pricing for wholesale power than would have been possible under the rate forecast from our former supplier, North Carolina Electric Membership Corporation (NCEMC). This will provide more stable rates for members because as a not-for-profit cooperative, Blue Ridge Electric provides at-cost electric service.
Our change in wholesale power suppliers didn’t, however, produce enough savings to offset the $7.2 million per year in wholesale power cost increases the cooperative received from NCEMC over the last two years. Therefore, the wholesale power cost adjustment (WPCA) you’ve seen on your monthly bills will be folded into the base rates and an additional 1.91 percent overall increase in our rates becomes effective in February. The WPCA is an adjustment used when wholesale power costs fluctuate from the contract price, and this change will put the WPCA at or near zero.
Since the wholesale power market was deregulated in the 1990s, it has become an increasingly competitive environment. We believe our partnership with Morgan Stanley Capital Group will produce benefits of more stable rates and reliable power for our members. We’ve worked diligently to develop a solution that holds down costs for our members and maintains reliable, adequate power supply.
I will continue to keep you informed on the new power supply partnership, and next month I’ll share the effects that deregulation of the wholesale power market place have had on our load management program.
Be Prepared Before a Storm Hits
Power outages can occur during or after a snow or ice storm if power lines are damaged. The following safety tips will help you to be prepared, safe, and more comfortable if severe weather causes an outage:
Prepare an emergency kit including:
- Battery powered radio
- A flashlight
- Extra, fresh batteries
- Bottled water and canned food
- Manual can opener
- Candles and matches
- First-Aid kit
- Extra blankets and quilts
Include an emergency telephone list to contact the police, fire department, hospital, Blue Ridge Electric, and local emergency management office if needed. And remember: cordless phones don’t work without power.
If you are experiencing a power outage…
Verify if you are the only one in your neighborhood without power. If that’s the case, check your breaker box to make sure all breakers are in “ON” position. If you still don’t have power, call Blue Ridge Electric at any of the local numbers listed on the back of this newsletter to report the outage.
Be sure to turn off all appliances especially any heat-producing electric equipment such as electric stoves, toaster ovens, irons, or hair curlers. Leave one light fixture on so you’ll know when power is restored.
Keep candles away from furniture, curtains, or any other flammable material. Never leave children alone in a room with a burning candle or open flame.
Never try to use gas stoves, charcoal or briquette grills or camp stoves to heat your home. They are designed to be used only outdoors where there is enough ventilation due to the amount of toxic fumes they produce. If you use them indoors you will rapidly eliminate the amount of oxygen in your house and increase the carbon monoxide inside your home. Carbon monoxide causes serious intoxication problems and even death.
If you are outside…
Stay away from any downed lines including power, telephone, or cable. Do not touch any object that is in contact with downed power lines.
Never drive your car over power lines. If a power line falls over your car while you are driving, stay inside your car until you receive appropriate help.
Bright Ideas Rewarded
Blue Ridge Electric helps support local education by annually awarding grants to local educators who develop winning ideas for supplemental academic projects to enhance classroom learning. Called Bright Ideas grants, these projects would otherwise go unfunded.
For the 2003-2004 school year, Blue Ridge Electric has awarded Bright Ideas grants totaling $17,744 to 19 local educators to directly benefit thousands of area students, teachers, schools, and communities.
Each September, Blue Ridge Electric seeks applications from area educators and principals serving grades K-12 in public schools. Grants are awarded in amounts from $100 to a maximum of $2,000. For more information on Bright Ideas, visit www.BlueRidgeEMC.com or contact Grey Scheer, community relations director, by calling your local Blue Ridge Electric office.
Published monthly by Blue Ridge Electric Membership Corporation for its 52,117 member-owners.
