What is Causing the Rate Increases?

Answers to that question were the focus of the Northeast Missouri Electric Power Cooperative (NE Power) 2009 Annual Meeting, attended by your Board and Management Staff on April 2nd.
 
NE Power is the transmission cooperative Access Energy Cooperative purchases all of our power from. They in turn purchase all of their power from the power generation cooperative Associated Electric Cooperative Inc. (AECI). Both NE Power and AECI recently offered the following information to explain why rates have been going up:
 
1) FUEL COSTS!! Generating electricity requires A LOT of fuel. Our electricity is   generated primarily by coal and natural gas. Since 2004, AECI’s cost to purchase coal has increased 92%, and transportation costs to get the coal have increased 50%. Natural gas prices have increased 114% since 2004.
 
2) OUR MEMBERS’ DEMAND FOR ELECTRICITY which is increasing by an average of 2.2% per year. AECI’s current generating portfolio shows their capacity as of this year will not meet our members’ needs, and they will be required to purchase more power off the market. That is expensive.
 
The first step they’ve taken to address this concern is implementing the Take Control and Save Program, an energy conservation program for members, including new rebates and incentives for energy conservation. Energy conservation is the CHEAPEST way to address this issue and the most environmentally friendly. A kilowatt not used is a kilowatt not generated in the first place. However, it will not solve the challenges of meeting our members’ growing demands for electricity.
 
AECI is in the process of constructing another natural gas power plant to assist in meeting our demands for electricity. Once that comes online, AECI will continue to be able to meet our increasing needs until about 2016. They must have in place plans for increased generation by then. Power generating facilities require millions and even billions of dollars to build and to maintain. But they will be necessary to make sure that when you flip that switch, your lights come on.
 
3) ENVIRONMENTAL RESPONSIBILITY. For about $5 per month per customer, AECI is producing the cleanest power they can at this time. Extensive and expensive research and technology is needed to produce further controls. Since 1994, AECI has spent One Billion Dollars to reduce sulfur and nitrogen oxide emissions. Expectations are to spend an additional $1.45 Billion over the next ten years for reductions in emissions of mercury, plus an additional $1.5 billion for further pollution control on existing power plants.
 
None of this takes into consideration proposed legislation on carbon emissions and their suggested connection with climate change. A very basic calculation by AECI shows that the average member produces approximately one ton of carbon emissions per month. So if legislators impose a carbon tax of $20 per ton, the average member will see an increase on their monthly electric bill of about $20 per month. A tax of $30 will produce an increase of about $30 per month for the average user, etc.
 
Taxes on carbon emissions will affect electric users across the nation at different levels. The Midwest will carry a significant burden of the total tax. Approximately 70% of electricity used in the Midwest is produced by coal; California uses only 5%. A significant portion of the tax dollars will be collected here in the Midwest to be used for funding governmental programs not all geared toward the energy industry.
 
AND not all proposed carbon tax legislation is created equally. One proposal includes a Cap and Trade System for the sale of carbon credits. Under this proposal the price for carbon emissions will be determined by the market, and by people who have absolutely no connection with the energy industry. We could see challenges very similar to gas prices we experienced last year.
 
4) WEATHER and MAINTENANCE EXPENSES are some other factors contributing to the recent wholesale power increases. We have seen some extreme weather cause record breaking damages to electrical equipment with the worst ice storm and the worst flooding ever experienced by our systems.
 
AECI, NE Power and Access Energy Cooperative are all committed to being the low cost provider of energy. The energy industry across the nation is facing very similar challenges and increases in rates. Open, honest communication remains a value we work very hard to protect.
 
Can we keep electricity affordable?? We are working very hard every day to meet these challenges. But we need your help. We need you to help us talk to our legislators about how the legislation being proposed will affect those of us at home. If you haven’t done so already, please get involved in the “Our Energy, Our Future” campaign by going to www.ourenergy.coop and ask your representatives if they will be willing to work with us to ensure our nation has reliable power at a price consumers can afford.