Custom Sales Book - 4

C O M M E N T S

The forecast for power

“Devoted to the rural way of life”

Updates offer frank look at challenges for electric co-ops
new simple-cycle gas power plant is in storage. Plans to build that plant, which is essentially a jet engine attached to a generator, have been tabled. But these types of plants can be constructed quickly when needed. The addition of new gas units — and the state’s largest wind farm — will give Associated tremendous flexibility in meeting power supply needs. Another huge blessing has been above-average rainfall the past two years that led to twice the normal supply of clean, low-cost hydropower. Eventually, current baseload plants will not meet the needs of the membership. Planning is now underway for that future need because new baseload plants can take many years to complete. Options include sharing the cost of a nuclear power plant with other utilities. Environmental concerns If there’s a dark cloud on an otherwise rosy forecast, it comes from a gathering storm tied to debate on climate change issues taking place in Washington, D.C. The uncertainty caused by this debate overshadows just about all the planning being done by the utility. “There’s a lot of uncertainty,” said Jim Jura, CEO and general manager of Associated. “And one of these is carbon. Will the government tax carbon in the future? The current administration wants to do that. We must make some important investment and operations decisions that will drive our costs in the future. That is all based on what the government is going to do about carbon.” Electric utilities across the Midwest have a tremendous exposure to any carbon tax such as the cap-and-trade scheme some members of Congress want implemented. That’s because utilities here use coal to generate 80 percent of their electricity. And coal remains considerably cheaper than the next cheapest fuel supply, natural gas. Besides potential limits on carbon releases, Associated also must make decisions on how to meet a host of new environmental regulations that will go into effect in the not-too-distant future. Already, $1.4 billion has been spent on reducing emissions at the New Madrid and Thomas Hill power plants. Meeting new requirements to reduce emissions of NOX and mercury could call for another $1.5 billion or more in spending.

Jim McCarty, editor jmccarty@ruralmissouri.coop Jason Jenkins, managing editor jjenkins@ruralmissouri.coop Heather Berry, associate editor hberry@ruralmissouri.coop Kyle Spradley, field editor kspradley@ruralmissouri.coop Jammie Berendzen, editorial assistant jberendzen@ruralmissouri.coop Mary Davis, production manager mdavis@ruralmissouri.coop Angie Jones-Gerber Dusty Weter Co-op page designers

or most electric cooperatives, wholesale power costs are the single largest budget item. So when officials from Associated Electric Cooperative speak, you can bet your cooperative listens. Every year, key staff from the Springfield-based cooperative, which supplies power to co-ops in Missouri and parts of Oklahoma and Iowa, gives updates on future trends in wholesale power supply. At the 2010 updates, electric cooperative leaders heard some good news and some news that has them concerned. Here’s a look at some of those issues: Rate stability — for now After several years of large increases, wholesale power rates appear to be stable, with predictions showing only one relatively small increase passed down to local co-ops from Associated through 2013. That bump comes in 2012 when Associated’s new Chouteau 2 Power Plant is completed and brought on line in Oklahoma. However, in 2014 the forecast calls for a 25 percent wholesale increase to pay for environmental regulations. And that amount could be just a fraction of what is truly required. (Local co-ops may have the need for rate increases for reasons other than wholesale rates.) Part of that stability comes from hedging the price of natural gas and diesel fuel by contracting for some of what is needed in advance of its use. While there’s a chance the future price will be lower, knowing the price now takes away some of the uncertainty involved in planning. Use of electricity has slowed Blame it on the economy, or give credit to ambitious energy-efficiency programs. Either way, for the first time in as long as anyone can remember, demand for electricity is flat. Typically, the Associated system sees an increase in demand of 2 percent per year. Last year, the system actually saw a 3.2 percent drop when weather is factored out of the equation. The economy has certainly slowed the construction of new homes on rural electric lines, and it has idled some commercial and industrial loads. But most Missouri electric co-ops primarily serve residential loads. So a decrease in energy use points to more consumers using energy wisely. Just three years ago, load was expected to grow 45 percent by 2025. But that forecast was made before Associated launched its ambitious “Take Control & Save” energy-efficiency program. These “negawatts” aren’t free. From 2008-2009, Associated invested $10.5 million to realize a projected 89,068 megawatt-hour savings in 2010. But that’s a small price compared to the cost of adding generation. And the savings will add up for members who take advantage of the program to make their homes more energy efficient. Future generation Midway through 2011, Associated’s new Chouteau 2 Power Plant will be completed. It will use natural gas to generate electricity, adding 540 megawatts of new generation. The addition of this plant should push back the need for additional generation until 2020. As a hedge, should load growth again take off, a

Circulation of this issue: 540,000
USPS 473-000 ISSN 0164-8578

Copyright 2010, Association of Missouri Electric Cooperatives. Call for reprint rights. Rural Missouri is published monthly by the Association of Missouri Electric Cooperatives. Barry Hart, executive vice president. Individual subscription rate: $9 per year or $21 for three years, taxes and postage included. Group rate for members of participating RECs $3.99, taxes and postage included. Delivery as specified by subscriber. If not specified, delivery will be by periodical class mail at subscriber’s expense. Periodical Class postage paid at Jefferson City, MO, and additional mailing offices.

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Postmasters: Send address changes to Rural Missouri, P.O. Box 1645, Jefferson City, MO 65102. Subscribers: Report change of address to your local cooperative. Do not send change of address to Rural Missouri. Advertising standards: Advertising published in Rural Missouri is accepted on the premise that the merchandise and services offered are accurately described and sold to customers at the advertised price. Rural Missouri and Missouri’s electric cooperatives do not endorse any products or services advertised herein. Advertising that does not conform to these standards or that is deceptive or misleading is never knowingly accepted by this publication. Advertising information: mdavis@ruralmissouri.coop 573-659-3400 National Advertising Representative: National Country Market; 611 S. Congress St., Suite 504; Austin, TX 78704 573-659-3400 Member, Missouri Association of Publications and Missouri Press Association

P.O. Box 1645 Jefferson City, MO 65102 573-659-3423 info@ruralmissouri.coop

Rural Missouri

What you can do Members can help control costs by shifting electricity use to off-peak hours when demand for electricity is at its lowest. You also can take advantage of rebates and energy-saving ideas promoted by your electric cooperative. This will allow you to have the same level of home comfort at a lower cost. Go to www.takecontrolandsave.coop to see what your coop has to offer through this program. Members also are being encouraged to take part in the Our Energy, Our Future campaign. This “Dialogue with America” helps connect members with elected officials so they can encourage them to protect consumers when they consider climate change legislation. More than 3.2 million messages have been sent to elected officials through the campaign. To join the campaign, contact your electric cooperative, attend your annual The Chouteau 2 Power Plant, now under construction in meeting or log on to www. Oklahoma, should add sufficient power to meet electric co-op ourenergy.coop. needs until around the year 2020.

RURAL MISSOURI

Table of Contents for the Digital Edition of Custom Sales Book

Custom Sales Book
Contents
Comments
Columns
Ghosts of the Grasslands
Out of the Way Eats
Mail Bag
Best of Rural Missouri
Hearth and Home
News Briefs
What’s Old is New Again
Marketplace
Around Missouri
Missouri’s Horse
Neighbors
Look for the Dinosaur
Just4Kids

Custom Sales Book