Wholesale Power Increases Lead to Rate Adjustment
Effective March 2010
Lenoir, North Carolina (November 23, 2009) — After a thorough review of a cost-of-service study indicating the need for a rate adjustment primarily due to significantly rising wholesale power costs, the board of directors of Blue Ridge Electric Membership Corporation has approved a rate adjustment that will take effect on March bills.
Members will see an additional 3.43 percent beginning on bills received after March 3, 2010. The average Blue Ridge Electric home uses 895 kilowatt hours per month, so this change will mean an additional $4.03 above what members are currently paying on the average monthly residential bill.
Blue Ridge Electric entered into a partial requirements wholesale power agreement with Duke Energy Carolinas in 2006 and then in February 2008 moved to a full requirements agreement. During this period of time, the price of coal has more than doubled. Since coal represents nearly 50 percent of the fuels used by Duke to fulfill the cooperative’s wholesale power supply, an increase of this magnitude greatly affects the cost of electricity.
The rising cost of fuels to generate electricity is impacting utilities across the nation, primarily resulting from global demand for coal in emerging economies such as China and India but also due to higher mining and commodity prices in general.
While the need for a rate adjustment is primarily driven by electricity fuel generation increases, the adjustment will also support transmission system improvements critical for the cooperative to continue providing reliable power to some 73,000 consumers.
Blue Ridge Electric’s Chief Executive Officer Doug Johnson said the cooperative has worked hard to control rising costs for its members and will continue to be focused on this goal. “As a cooperative, our priority is to deliver the lowest cost electricity possible even with the pressures of the current market where the cost of fuels to generate electricity has dramatically risen,” Johnson said.
“The cooperative is working in all ways to control costs”, he continued. One key way Blue Ridge Electric has been able to reduce future costs is through its smart grid technology implementation. Through smart meters and the automated metering infrastructure (AMI) being implemented, the cooperative has saved $450,000 in meter reading costs alone this year. AMI will continue producing similar savings each year over the life of the system. At the same time, AMI also modernizes the way electricity is distributed, monitored and consumed, which produces benefits for both consumers and utilities.
Johnson added that employees have worked especially hard to find ways to contain costs while still delivering the best power reliability and customer service possible—two areas of performance Blue Ridge Electric is recognized for across the state and nation.
“Through an internal ‘WorkSmart’ effort, employees have identified ways to improve efficiencies or utilize available technologies which has resulted in more than $600,000 in cost reductions for this year that can be made without effecting power reliability or customer care. While certainly helpful, these reductions cannot make up for the magnitude of wholesale power cost increases the cooperative is experiencing,” Johnson explained, adding that wholesale power makes up a little more than 60 percent of total cooperative costs.
“As a cooperative, our service is ‘at cost’ to the members and we will always continue to work to keep costs as low as possible for our members,” Johnson said. “It is never easy to pass along increases to our members; we only implement a rate adjustment when absolutely necessary.”
Look for more details on the rate adjustment in the December member newsletter, Membership Matters.
Blue Ridge Electric serves some 73,000 member-owners in Caldwell, Watauga, Ashe, and Alleghany counties as well as parts of Avery, Alexander and Wilkes counties.
