Tipton, Mo. (Nov. 26, 2014) — Co-Mo Electric Cooperative members’ rates will stay the same for 2015.
This comes after the cooperative’s Board of Directors approved the budget for the upcoming year at its November meeting.
“We’re happy to be able to do this, to hold the line in a very challenging environment,” said Ken Johnson, the cooperative’s CEO and general manager. “It’s a sign that we run a tight ship and have made smart investments in technology when we can keep our rates level as so many other costs around us increase.”
Co-Mo members have seen just two rate adjustments since 2010, a 3.5 percent increase in the energy charge in 2010 and a $4 increase to the service availability charge in 2014.
“When you look at our track record for holding rates as reasonable as possible over an extended period of time, members have something to be proud of when they think about their electric cooperative,” Johnson said.
But Johnson warned keeping rates steady for much longer would be difficult.
“We’re in a very challenging time when it comes to regulatory costs from the federal government. Whether you like the changes being proposed by the Environmental Protection Agency or not, the reality is that they will add significant cost to the cooperative, and that will make holding the line on rates very challenging,” he said.
The EPA has proposed rules that will make generating electricity with affordable, plentiful, domestic coal much more difficult. Other fuels — including natural gas, wind and hydro — are more expensive. Co-Mo members have joined with more than 1.1 million electric cooperative members around the country via the Cooperative Action Network and the Action.coop campaign to speak out to the EPA in favor of a more realistic, less costly approach to address environmental concerns.
In addition to the EPA issues, the cooperative’s power supplier has faced challenges of another sort. Coal deliveries from BNSF Railway to the Springfield-based Associated ElectricCooperative Inc. have been off pace, leading to lower stockpiles and more costs. This has limited AECI’s ability to sell surplus power — electricity generated by AECI but not needed by its member systems — on the open market.
“Selling surplus power can be a significant revenue stream for our power supplier during a typical year, but that excess just isn’t there because we’re having to conserve coal to generate power for our own members,” Johnson said.
BNSF has promised to invest $5 billion to add infrastructure, locomotives and employees to help alleviate the problem, but to ramp back up to meet demand will take time, AECI representatives said.
“And so you add the cost of pending regulations to that coal-delivery issue and couple it with the fact that the availability of hydroelectric power has been down, and you’ve got a situation where there is a lot of upward pressure on rates,” Johnson said.
The other variable Co-Mo faces every year is the weather.
“The majority of our revenue projections are driven by kilowatt hour sales, which has a direct relationship with the weather patterns we see on a year-by-year basis,” said Sean Friend,the cooperative’s Director of Finance. “Heat load and cooling load have the biggest impact on our sales.”
But for now, the cooperative is happy to be doing what so few utilities are able to do for the coming year.
“Yes, we know we’re facing a lot of upward pressure on rates,” Friend said. “But we’re happy to be able to hold the line for another year.”