CEO Note - Keeping costs low is a balancing act

Cooperative staff reviewing costs and rates

Over the last couple of months this article has focused on the work your cooperative staff is doing to review our distribution system costs and revise our electrical rate structures. If you attended the annual meeting you heard me speak briefly about the costs associated with the required system upgrades we are currently working on and you heard Dr. Marty Blake talk about our overall rate picture as well. As we assess the need to realign our rates we want to minimize large increases in single events and we want to create options to allow you, our members, greater control over the amount of your total bill through choices you make in the way you use electricity in the future.

While we focus on costs directly related to our electric distribution system here at home, there are still lingering issues facing us as a nation that could add to the overall costs of electric service from the generation / supply side of the business. You may recall from past articles that the charges on your bill directly related to Tipmont distributing electricity to your home amounts to about 30 percent of the total bill. The rest goes toward the generation, purchase, and transmission of power from our suppliers. Let’s talk for a moment about some of the issues that could impact this portion of your bill soon.

Issues that could impact your bill

Congress did not pass a comprehensive climate bill last year. In January the U.S. Environmental Protection Agency (EPA) began regulating greenhouse gasses, an action made possible by a 2007 Supreme Court decision, followed by rulings allowing the EPA to use the Clean Air Act to curb carbon emissions. Policies dealing with coal ash, even more stringent controls on other power plant emissions, and state renewable energy requirements could also lead to higher costs. It’s hard to predict the future, but one thing seems certain: government regulations are going to increase the cost of doing business.

New regulations won’t be the only culprit. Prices for fuel, materials, and equipment will continue to rise. Although the recent economic slump and corresponding drop in electricity use provided some much-needed breathing room, soon the industry will need to build new power plants, requiring a significant, long-term investment of time and money.

Keeping you informed

I don’t tell you this to alarm you. As I stated at the annual meeting, what I say may not always win me popularity contest but I will give it to you straight. As a member you should be aware of these issues and know what we are facing. We’re committed to keeping you informed about issues that will impact your electric bill through channels like the Electric Consumer, our website, and other opportunities to communicate with you, our members. The staff at Tipmont, along with those at Indiana Statewide and Wabash Valley Power Association, is going to do everything we can to keep your electric bills affordable while providing the reliability you have demanded. However, I have to admit it is a tough balancing act that is only getting harder.

To accomplish that, we will look to control overall costs. Yes, we have to spend some money now to upgrade our systems. As with any business, we will have to constantly reinvest to maintain our equipment and allow for growth. However, once we have the proper tools and rate structures in place we will be able to bolster our energy efficiency efforts, provide more reliable service, and offer you, our member, tools that will help you manage your electrical consumption if you so choose. We are currently overhauling our energy advisor programs for both residential and commercial members and we will continue to work to offer rebates on energy efficient equipment upgrades throughout our service territory.

Facing the challenges

The bottom line is the cooperative exists to serve you and meet your needs for safe, reliable, and affordable power. We are facing some challenging times throughout the energy industry and across our national economy in general. My vow to you is to meet these challenges head on and keep the membership informed. No matter what the future brings, one thing will be certain… The staff at your cooperative will work to do the right thing for you, our members.