Wholesale Power Costs, Transmission Needs Lead to Increases
For Immediate Release
Contact: Renee Whitener, Director of Corporate Communications, Blue Ridge Electric Membership Corporation, (828) 758-2383 ext. 3213; Pager:1-800-471-1323; or E-mail: Renee Whitener
Lenoir, North Carolina (March 1, 2002) – Due to significantly rising wholesale power costs and the need for major transmission and reliability improvements, the Board of Directors of Blue Ridge Electric Membership Corporation has approved an increase in the monthly wholesale power cost adjustment and basic service charges for members. This is the first time in nine years the basic service charge has increased.
The average residential consumer using 800 kilowatt hours per month will see an increase from $2 to an estimated $5 for their wholesale power cost adjustment (WPCA) on their April bills, while the basic monthly charge rises from $9.55 to $12.50 beginning on bills printed after April 9.
The decision was made at the February 28 board meeting after reviewing the impact to the cooperative of wholesale power costs—which will rise by $4 million this year—and the need to fund $40 million in critical transmission and system reliability improvements.
“It’s never easy to increase rates or charges,” said Doug Johnson, chief executive officer of Blue Ridge Electric. “Blue Ridge Electric has an excellent track record of holding down rates; this is the first time in nine years we’ve found it necessary to implement an increase. However, the cooperative cannot absorb a wholesale power increase of this magnitude and a major rebuild of our transmission delivery system without increasing rates,” he added.
Johnson said cooperative employees have worked hard to reduce costs and minimize the impact to members. “We’ve made a conscientious effort across all departments to cut costs wherever possible without sacrificing the reliability of our member’s electricity or the level of customer service they deserve,” Johnson said. “Our members have ranked our reliability and service as tops in the state among all utilities, and we don’t believe they want to us compromise either of these areas.”
The WPCA is a direct “pass through” cost to members to recover over $4 million in cost increases for wholesale power Blue Ridge Electric will purchase this year from its power supplier, North Carolina Electric Membership Corporation (NCEMC). As a distribution cooperative, Blue Ridge Electric doesn’t generate any of its own power—it purchases power for distribution to its members. Blue Ridge Electric is one of 26 electric cooperatives in the state who come under the NCEMC umbrella for joint power purchases.
Deregulation of the wholesale power marketplace led to some decreases in wholesale power prices in the late 1990s, and as a result Blue Ridge Electric returned nearly $3.5 million to members in the form of a special adjustment on their bill. These prices have now begun to increase and member cooperatives began feeling the effect last year as NCEMC renegotiated long-term power contracts. The new contracts came in at higher prices than the ones they replaced, even though NCEMC got the best available prices in the wholesale power market at that time, Johnson explained.
The monthly basic service charge is part of the member’s rate for electricity and the service associated with its delivery. This charge covers the operation and maintenance costs of serving individual consumer categories, ranging from homeowners to large commercial and industrial businesses.
A recently completed cost of services study was utilized in revising the basic service charge. The study indicated what it truly costs the cooperative to serve individual categories of consumers. This information was used to determine appropriate revisions to more accurately and fairly reflect member charges.
The funds from the basic monthly service charge will also help finance critical transmission and system reliability improvement for the cooperative’s growing membership. The charge will produce a yearly $1.5 million to fund the annual depreciation and interest needed to cover the $40 million investment in critical transmission and reliability upgrades.
“As a not-for-profit cooperative, we all share in maintaining our utility, which is more costly to operate in a rural, mountainous area with fewer customers per mile of line than a utility serving a more populated area,” Johnson said. Blue Ridge Electric is also unique in needing to provide its own transmission service, he added. “Most other distribution utilities can tap into transmission lines crossing into their service territory, but Blue Ridge Electric doesn’t have that opportunity. Because of our isolated geography, the cooperative has built and maintains over 277 miles of transmission line. In addition, the cooperative operates 6,800 miles of distribution line, with an average customer density of only 10 customers (per mile of line).
“Almost 37 miles of this is 230KV line from Ashe County to Wilkes County that provides our connection to the regional transmission system of Duke Power Co. The large transmission facilities we have to maintain are uncommon for most electric cooperatives,” he explained.
“Reliability and customer service at an affordable price is the heart and soul of our mission as a cooperative business,” Johnson added “and our board, staff and every employee is committed to fulfilling this mission.
Blue Ridge Electric is a cooperative utility serving nearly 64,000 consumers in Caldwell, Watauga, Ashe, Alleghany, Wilkes and Alexander counties.
