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October 13, 2011

Tri-County Electric Coop Re-Opens Discussions With City of Memphis

While there has been a change in leadership at Tri-County Electric Cooperative in the past several months, representatives from the power provider were on hand at the Memphis City Council meeting on October 6th to inform the board of aldermen that the organization's willingness to work with the community has remained constant.

Tri-County assistant manager Kevin Wheeler and Kevin White, manager of engineering and operations at Northeast Missouri Electric Power Cooperative, were present at the meeting to reaffirm the past cooperation.

"There are some new faces at Tri-County, but we want the city to know that we are still here to help," Wheeler stated.

The cooperative had originally expressed a willingness to work with the city back in 2006 when general manager David Ramsey, along with the president of the cooperative's governing board, John Eggleston of Memphis, met with the council in a special meeting designed for both parties to learn more about each other amidst ongoing discussions at that time regarding the city's escalating power costs.

Ramsey recently retired from his general manager post and the cooperative is currently in the search process for his replacement. The cooperative board is now led by president Michael Small of Scotland County.

Wheeler pointed out that the three-tiered cooperative system's options had remained virtually unchanged since 2006. It was the group's move away from wholesale power contracts that forced the city of Memphis to find alternative power providers, which ended with the city joining the Missouri Public Energy Pool (MoPEP) with dozens of other towns across that state in 1996. The city of Memphis continues as a member of MoPEP.

The only other option for a working arrangement between the two parties would be for Tri-County to purchase the city electric system, turning Memphis residents into individual members of Tri-County Electric Cooperative. That option was briefly considered in 2006, but a number of factors, as well as the city's existing contract with MoPEP, prevented the negotiations from growing beyond just preliminary discussions.

Alderman Lucas Remley questioned if the position on the city's generation capacity had varied. In previous meetings, he noted that the coop reps had indicated that local coops could not own generation.

Wheeler stated that position had not changed, but indicated that would ultimately be a decision of Associated, which is the power generation body of the state's coop system. This top tier, supplies power to the system's six distribution and transmission coops (Northeast is the local distribution coop), which in turn furnish power for the 40 power cooperatives like Tri-County.

Alderman Chris Feeney asked how the state's cooperatives were positioned for power generation capacity.

White stated that the coop system currently has excess power and is not projected to have to add additional power generation capacity until 2025.

Tri County's electric rates, which were established in April of 2009 include a monthly availability charge of $27.50 with power costing $0.0925 per kWh for the first 750 kWh with the rate decreasing to $0.0780 per kWh beyond 750.

The City of Memphis electric rate is $0.1663 per kWh for the first 30 kWh, $0.1361 for the next 20 kWh and then $0.1143 per kWh thereafter.

The Department of Energy states the average American household consumes 14,000 kWh a year of less than 1,200 kWh a month.

With those base rates, the average household that used 1,200 kWh would pay $131.98 as a Tri-County customer and $138.25 at the base rate for the city of Memphis established in May of 2009.

The difference for Memphis residents is the power surcharge, which represents the difference in the city's electric rate and the cost of power it purchases to supply to residents, which averages about a penny per kWh but has been as high as 2.6 cents in August of 2011. That means city customers with the average 1200 kWh consumption are paying $12 a month more on average, or in the worst case scenario in August, $31.20

Those numbers change even more in favor of Tri County customers who use larger amounts of power based on their tiered pay rate. Consumers that exceed that 1,200 kWh average where the two rate schedules basically break even, witness a 3.5 cent per kWh lower rate with Tri-County's structure before the city adds on the power surcharge which even further widens that divide.

Surrounded by rural customers whom are perceived to be paying lower rates, Memphis residents are questioning why their rates are higher.

Those discussions fueled the meeting Thursday evening, with both parties agreeing to keep their options open moving forward.


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