While visiting Yoder's Garden Shop and Deli, a SEMO Electric Cooperative member-owner at Aquilla, another SEMO member-owner stopped and asked me about the cooperative’s electric rates for 2016. He said: “I heard SEMO’s rates are going up fifty percent next year.” I replied by saying the information was news to me and we are working hard to keep our residential rate per unit of energy (known as a kilowatt-hour) at 8.79 cents, which has not changed for nearly three years.
As we talked, it was clear the attention on the Environmental Protection Agency’s (EPA) final, nearly 1,600 page Clean Power Plan, has coffee shops talking about future electricity prices. The plan was full of surprises – most of them not good for Missouri and several other states. The EPA’s final plan calls for a 32 percent reduction in power plants’ greenhouse gas emissions from 2005 levels by 2030. The final plan is extremely complex and three times the length of the draft plan. The EPA will face numerous legal challenges, which means uncertainty will continue for some time. This uncertainty makes it hard for SEMO to predict future electric rates based on regulations and outcomes in federal courthouses. Ultimately, the final rule will reduce the use of coal to generate electricity and increase the cost of producing electricity for member-owners. Is a 50% rate increase possible in the coming years? Only time will tell.
So what do we do? I don’t know, but I know we need to be forward-looking and make sure we are engaged in the debate surrounding federal regulations. Like many of you, I want clean energy, but also I want safe, reliable and low-cost energy. Did you know SEMO is already delivering electricity that is generated from other sources than coal? In my analysis of our recent electricity generation mix report, SEMO member-owners are receiving nearly 25% of non-coal electricity from hydro, wind and natural gas. SEMO and its electricity generator – Associated Electric Cooperative (AECI) – have been and will continue to be forward-looking. Our approach is already providing clean energy for your home, farm and business. Additional regulations will more likely create additional jobs in Washington, D.C. rather than real jobs in southeast Missouri.
Back to Yoder’s, I did indicate that the cooperative is in its final stages of developing capital and operating and maintenance budgets for 2016. We may increase the service availability charge by $2 per month (a total increase of $24 for 2016), but SEMO’s residential rate per unit of energy will remain at 8.79 cents. Therefore, no large increases are predicted for 2016.
Looking ahead to 2016, SEMO will contract for $18 million (approximately 67% of 2016's operating budget) of electricity to deliver to thousands of homes, businesses and farms in southeast Missouri. Similar to an automobile that requires oil changes and safety inspections, SEMO’s complex delivery system – which includes about 2,600 miles of distribution lines – demands constant inspection and routine maintenance to keep the lights on. Our capital investment projects will be around $3 million as we update facilities and replace poles and wires. We will invest $1.75 million for vegetation management and tree trimming. Other expenses include the co-op’s day-to-day operating costs, which includes member service representatives to welcome you in Bloomfield and Sikeston and the mechanic who keeps the fleet in good working order so linemen can restore the power after a storm.
As a not-for-profit electric cooperative, each business decision we make impacts our member-owners’ electricity rates. Team SEMO works hard to contain costs and make prudent business decisions. For example, we are streamlining our warehouses for more efficient order fulfillment, we are reducing paper usage by utilizing iPads for service orders and we have taken a more hands-on approach with vegetation management to reduce outages and enhance reliability. We aren’t perfect, but we are paying attention.
Halloween shout-outs to members-owners Dave Kieffer, Melinda Masters, Dan Rice, Gale Gaither, James Garner, Leeman Shirrell, Gerald Owens, Ralph White, Hugh Hunter Byrd, Pete Ritter and River Ridge Winery and Martin Rice Company.
Be smart. Act safe.