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Rate Increase Will Be On May 1 Bill Over the last several years I have written articles describing the impact that rising energy costs and rising material costs are having on our business. The cost of generating electricity is increasing due to the rising cost of coal and natural gas. Other contributing factors to this are the increasing costs of regulation and the increased transportation cost for the coal. Add to that the rising costs of the materials needed to bring the power to you (wire, poles, equipment, etc.) and we are again faced with a difficult financial decision. We have been notified from our power supplier that we will receive a 12.5 percent increase in the cost of our purchased power effective April 1, 2009. Last year we received a 25.3 per-cent increase on our cost of purchased power, of which the average residential member saw an 8 percent increase to their bill. The staff of Farmers' Electric has been trying to determine what our best options are in dealing with this latest increase, and we have been sharing this information with your board of directors. At the January board meeting the recommendation was made, and passed, to implement a 12.5 percent rate increase effective with the bills issued on May 1, 2009. Your actual percentage increase may vary depending on your usage and rate class. Our average residential member, who uses approximately 1,100 kWh per month, will see an increase of 11.98 percent, or $13.60 a month. Even with this increase, the cost of electricity for the average residential member is less than $4.25 per day. This was a very difficult decision to make. No one likes rate increases, but we know that this was the correct decision as it is necessary to maintain the financial stability of the cooperative. We are required by our lenders to meet certain financial requirements, and this rate increase is necessary to meet those requirements. We have made cuts to the 2009 budget to minimize the necessary increase, but the budget cuts do not come close to offsetting the increase that we will see in our cost of purchased power. We will continue to work to keep our rates as stable as possible. However, we will not sacrifice reliability in an attempt to keep your rates slightly lower. We will continue an aggressive maintenance program, which includes right-of-way clearing. The expense of our maintenance program is far less than the cost we will incur if we do not do this, and our system is hit with a tornado or ice storm. Not only could you be out of power for an extended period of time, but the cost tor estore service could be greater than the cost of our maintenance program. As I've mentioned in earlier columns, some of the proposed legislation being discussed by the new Congress could have a huge impact on your future electric bills. Any proposed tax, or any added cost incurred by our power generator through a "cap and trade" program will eventually be passed on to you, the member. Please let your senators and congressman hear from you, and have them consider all the consequences to their constituents before they pass any bills like this. You can contact them online at www.ourenergy.coop. Your Electric
Rate Will Increase This Spring Our power supplier has informed us that we will have another increase to our cost of wholesale power in 2009. We are working hard to see what options are available to us to minimize this rate increase to you, yet maintain the financial stability of the cooperative. We must also be careful not to cut costs in areas that will reduce our quality of service. Once we have studied the options, we will share this information with your Board of Directors, and together we will decide how much of a rate increase is necessary. This decision will then be shared with you in a future newsletter. Associated Electric Cooperative Inc. (AECI) generates our power. They generate this power by a variety of methods, using wind, hydro, coal, and natural gas. The hydro and wind plants are the cheapest to operate, but they can't deliver reliable power and fall far short of being able to generate enough power to meet the demand. Coal is the next cheapest option. The AECI coal-fired plants generate the majority of the electric power that is used by members of cooperatives in Missouri, southern Iowa, and northeast Oklahoma. AECI also uses its natural gas plants to generate power during peak times, and to meet the growing base load demand. The five coal-fired plants that AECI has were built in the1960's and 1970's, and the costs of maintaining these plants are increasing. In addition to the rising maintenance costs, AECI has also spent millions of dollars to meet the latest EPA regulations. AECI has recently spent $424 million to install selective catalytic reduction equipment on the Thomas Hill Plant to reduce nitrogen oxide emissions. This amounts to a one-time capital cost of $500 per member, and an on-going operating cost of $10/member/year. Using energy efficiently and wisely will help reduce the amount of your electric bill today, and can also help reduce the amount of your future bills. Minimizing your usage between 6 p.m. and 9 p.m. during the winter will help reduce our peak demand, which in turn will help reduce your electric bill. Another thing that you can do to help reduce future rate increases is to take part in the "Our Energy, Our Future" campaign. Our elected officials need to know that some f the bills that are currently being discussed will have a drastic impact on your electric bill. Please contact your legislators and ask them to look for balanced solutions to the energy issues that we face in this nation. You can contact them online at www.ourenergy.coop. |
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