Blue Ridge Electric Contracts With Morgan Stanley Capital Group For Wholesale Power Needs
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 (January 5, 2004) – Blue Ridge Electric Membership Corporation, along with three other North Carolina electric cooperatives, announced today that they have signed an agreement with Morgan Stanley Capital Group Inc. to begin supplying their wholesale power contracts and power supply resources effective January 1, 2004.
The boards of Blue Ridge Electric Membership Corporation, EnergyUnited, Piedmont Electric Membership Corporation, and Rutherford Electric Membership Corporation approved the move to the new wholesale power supplier. The four co-ops will remain independent members of North Carolina Electric Membership Corporation (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.
The decision came after a joint yearlong wholesale power supply study by the cooperatives with one of the nation’s leading power supply consultants and one of the most respected legal advisors to the industry.
“We initiated a study at Blue Ridge after we saw a significant rise in wholesale power costs and realized the impact this could have on the cooperative and its members,” said Doug Johnson, chief executive officer of Blue Ridge Electric. “Our goal in conducting the study was to better stabilize rates for our members and curb rising costs,” he added.
The cooperative’s new contracts with Morgan Stanley Capital Group will help better manage rising 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 provided to the cooperative from its former wholesale power provider, 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 help fully recover this expense, the current wholesale power cost adjustment (WPCA) on members’ their monthly bills will be folded into the cooperative’s base rate and an additional 1.91 percent overall increase in its 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 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.
The four cooperatives say the change in wholesale power providers will produce benefits for their members. “As we strive to serve our members with the best customer care and value available, this move allows each of our cooperatives to better achieve rate stabilization and to better manage our power supply for the benefit of our member-owners,” said chief executives of the four cooperatives: Doug Johnson, Blue Ridge Electric, R.B. Sloan, Jr., EnergyUnited, Randy Brecheisen, Piedmont EMC, and Gary Whitener, Rutherford EMC.
The four not-for-profit, member-owned cooperatives collectively serve some 260,000 residential, commercial, and industrial members. The service area of these cooperatives stretches from the Raleigh suburbs to the fringes of Charlotte, to the Blue Ridge Mountains bordering Virginia and the Piedmont adjoining South Carolina.
The top officials said Morgan Stanley Capital Group will also provide energy related risk management products to hedge against 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.
Electric cooperatives are formed as not-for-profit, locally owned and operated entities that exist to meet the energy needs of their member-owners and the communities which they serve.
Blue Ridge Electric serves some 66,000 members in Caldwell, Watauga, Ashe, and Alleghany counties and parts of Wilkes, Alexander and Avery counties.
