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Rate Adjustment Reflected on May 2008 Bill

Grundy Electric Cooperative Board of Directors announced last month (see below) that an overall cooperative rate increase of approximately 6.15% will be reflected on the members’ May bill.

A Rate Schedule summary is shown below. This chart includes the existing electric rate for Single Phase and Small Three Phase Classifications. The new rate is shown in the second column. The exact rate increase to each member will vary based on member usage and current rate classification, however, all rate classifications will receive a rate adjustment. For example an average residential member on our system uses 1,000 kilowatt-hours of electricity per month. With the current rate a member’s bill would total $94.50. With the new rate the bill would total $99.50, an increase of $5.00 per month.

Grundy Electric announced several months ago that a rate increase would be implemented. The primary reason for the rate increase is that our power supplier, Associated Electric has informed the cooperative that beginning in April, the power Grundy Electric purchases will cost about 25% more in 2008 than last year. This is a tremendous increase and one that your Cooperative cannot absorb, but rather must pass onto our member-owners in order to remain a healthy and viable distribution cooperative.

In recent years, Grundy Electric’s power supplier began implementing a series of wholesale electric rate increases. The cost of electricity is rising due to a number of factors:

• Higher fuel costs used to generate electricity; coal and the transportation of coal, natural gas, and hydropower are all continuing to increase in cost.
• Environmental regulations are also on the rise. In the past 13 years, Associated alone has invested $650 million to reduce emissions at its coal-based power plants. Associated will spend $468 mil-lion on additional environmental improvements. This includes $330 million to meet new standards passed by Congress. Depending on future political and regulatory decisions, especially regarding carbon control, these costs could be even higher.
• As our two large coal power plants begin to age frequent maintenance becomes more routine to ensure reliability. Important repairs and maintenance are essential to the reliability of members’ electric service. These maintenance costs are also increasing.
• Increased demand for power by cooperative members continues to rise. This demand for additional base load is driving the need to seek out additional means of power generation. New generation investment is just one of the reasons for increasing rates.

Through sound management and planning Grundy Electric strives to keep rate increases as low as possible. “In order to continue maintaining dependable, reliable service and financial stability, it is necessary for us to adjust rates,” says Scott Wilson, General Manager. “Grundy Electric’s wholesale power cost is the largest single cost to your cooperative.” Your Cooperative is committed to providing you with the most reliable, affordable and environmentally responsible electric service.

If you should have any questions or comments concerning the upcoming rate increase, we encourage you to contact our office at 1-800-279-2249 or 660-359-3941.

Related Article:

Rural Missouri Back Page, March, 2008 - As a member of Grundy Electric Cooperative you flip the switch and the light comes on. You plug in the refrigerator and it gets cold. The temperature drops and the furnace kicks on. That’s the way things are supposed to work.

The reason power flows to the light bulb when you flip the switch is because Missouri is blessed by an adequate supply of baseload generation. But as the membership grows, larger homes are built and more electronic gadgets are added, the need for new baseload generation has arrived.

Forecasts by Associated Electric Cooperative (AECI), which generates the power for electric cooperatives in Missouri and parts of Iowa and Oklahoma, show electric cooperative members will use 2.3 percent more electricity every year for at least the next 10 years. At this pace, more generation will be needed to meet members’ needs. Currently, AECI is working to-ward the construction of a baseload coal plant to be located in Norborne, Missouri. Construction of this power plant due to increased demand, and fuel to operate generators are only two of the factors contributing to increasing electric rates.

In addition, the electric transmission grid is seeing much heavier traffic. But generating more power does no one any good unless it can be moved to where it is need-ed. As new sources of power come online, so too must new transmission lines. During the next 10 years, $350 mil-lion will be spent on transmission upgrades by Associated and the six transmission cooperatives that together own Associated. Such improvements are part of the reason the price you pay for electricity is on the rise. Upgrades to the transmission network, while expensive, are vital to reliable power supply.

Electric utilities across the country have made dramatic decreases in the greenhouse gas emissions coming from power plants. But this progress has come at great cost. And past costs are just the tip of the iceberg com-pared to what could be coming. Each year, the Environ-mental Protection Agency looks at emissions that could affect health. Between 1970 and 2006, the six principal air pollutants the agency measures dropped by 54 percent. While this was happening, energy consumption increased 49 percent and the U.S. population increased 46 percent.

In the past 13 years, Associated alone has invested $650 million to reduce emissions at its coal-based power plants. In 2006, the cost to operate emissions equipment at the Thomas Hill and New Madrid plants totaled more than $12 million. Operating costs in 2006 to remove NOx totaled about $10 million. Those costs will increase to $16 million when Associated begins meeting the new federal regulations starting in 2009. And these costs are ultimately passed on to cooperative members.

Grundy Electric Cooperative’s Board of Directors voted at the January meeting to implement an overall rate increase of approximately 6.2%. This increase will be reflected on the members’ May bill. The exact rate increase to each member will vary based on individual usage and current rate classification. In an effort to keep our member-owners informed, Grundy Electric continues to issue updates regarding AECI’s plan for a series of rate increases and why they are necessary. More detailed information regarding the rate increase will be outlined in the next issue of Rural Missouri.

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