Suwannee Valley Electric Cooperative, Inc. 386 362 2226

By John Martz, Executive VP & CEO

MANAGER’S UPDATE John Martz

Lawmakers urged to keep electricity reliable, affordable

Electricity needs to remain reliable and affordable.

That’s the message 16 representatives from Florida’s electric cooperatives told our Senators and Representatives in Washington recently at a scheduled legislative rally.

Cooperative representatives explained because they’re non-profit and consumer-owned, keeping rates affordable is always a priority. But with the current state of the economy, it’s more critical than ever. Florida’s unemployment rate is 12 percent -- compared to 9.5 percent nationally. And 35 percent of the households in Florida’s electric cooperatives live on incomes below $30,000.

The cooperatives asked for Congress’ help by inviting legislators to:

Send a letter to the federal Surface Transportation Board to protect “captive” rail shippers, like Seminole Electric Cooperative (your cooperative’s power supplier), from unreasonable rates
Not support carbon cap-and-trade legislation
Prevent the Environmental Protection Agency (EPA) from regulating carbon through the Clean Air Act
Support a 2011 budget that maintains funding for the Rural Utilities Service (RUS) —a federal loan program for electric cooperatives — at the 2010 level and oppose restrictions on natural gas projects and environmental upgrades

The only way Seminole can get coal to its Seminole Generating Station in Putnam County, is by the CSX railroad. On Jan. 1, 2009, CSX essentially doubled Seminole’s coal transport rate. The new rate added more than $53 million to coal transportation costs in 2009 and cost $80 million each year thereafter, for as long as the rate continues in effect.

Seminole has no choice but to pass these transportation costs on to Suwannee Valley Electric Cooperative and its other nine members. Seminole’s only option to contest these unjust and unreasonable rates was to file a complaint with the Surface Transportation Board (STB). To protect our consumers, the cooperative asked our elected officials to send letters to the STB, requesting that the agency thoroughly evaluate the evidence to ensure Seminole’s coal transportation rates are set at reasonable levels.

We thank Sen. Bill Nelson, Sen.George S. LeMieux , Rep. Allen Boyd and Ginny Brown-Waite for sending letters. We are hopeful that Representatives Gus Bilirakis and Cliff Stearns will join them as well.

Unfortunately, this isn’t the only issue that can affect your rates.

Regulating carbon dioxide through laws or regulations has been a priority of the President and the leadership in the House and Senate. Whether it is through cap-and-trade legislation or through new EPA rules, the regulation of carbon dioxide is certain to increase your electric bills.

Today, more than 90 percent of the electricity that Seminole provides for its Members comes from coal or natural gas, both of which emit carbon dioxide. In 2009, renewable resources met about 4 percent of Seminole’s Member energy needs. From a reliability and economic standpoint, coal and natural gas will remain our primary fuels for decades to come.

Under cap-and-trade legislation, Seminole would have these options:

Pay for the right to emit carbon dioxide, a compound we emit with every breath
Install expensive, still to be proven, control equipment that removes the carbon dioxide, then stores it in a liquefied and hazardous form, in underground caverns
Generate electricity using alternative, higher-cost fuels

The law would essentially be adding a tax on your use of electricity. Under proposed EPA rules, utilities would have to install carbon-removal equipment on new generation using fossil fuels. Unfortunately, this technology has not been perfected and safety and liability issues with underground storage have not been addressed.

Near term, there are no viable options if we are to keep your lights on. A new law or new rule from EPA regulating carbon dioxide will simply raise your rates.

In Washington, the cooperatives asked lawmakers not to support carbon cap-and-trade legislation unless it can be determined with a greater degree of certainty that mankind is having a meaningful impact on observed trends in global warming. Before billions of dollars are spent seeking to reduce mankind’s emissions of carbon dioxide, we must have confidence that such reductions will have a beneficial effect on our environment that will justify such expenditures. It is also extremely important that before we mandate carbon dioxide capture and storage, we have confidence that the technology exists to do so in a safe and economical manner.

The cooperatives also asked Congress to support any of the proposed bills that would prevent the EPA from regulating carbon under the Clean Air Act. The Act was never intended to control non-pollutants such as carbon dioxide and would be a costly, ineffective way to do it.

Finally, the cooperatives asked lawmakers to keep the 2011 RUS loan program funding at the 2010 level of $6.6 billion. The Obama administration has proposed scaling it back to $4.1 billion and restricting its use.

Electric cooperatives use RUS loans to build and maintain power plants and power lines. They are a prime reason why cooperative electric rates are competitive since co-ops are not eligible for federal subsidies investor-owned and municipal utilities get under existing federal tax law.

In 2010, the RUS loan program is projected to return more than $63 million to the U. S. Treasury as cooperatives repay their loans. While reducing the loan level appears to be a cost-cutting measure, it will actually cut revenue for the government.

The cooperatives asked lawmakers to sign a letter initiated by Congressman Allen Boyd that supports maintaining the level of the RUS loan program. Representatives Adam Putnam, Ginny Brown-Waite and Jeff Miller have signed it.

Keeping electricity reliable and affordable is more than just keeping power plants and power lines working efficiently. While cooperatives are actively working to ensure that legislation doesn’t work against us, you can help by contacting your Senators and Representatives and letting them know that you want them to keep electric rates reasonable.

Your co-op offers a convenient service to you on its website through the easy-to-use, “Our Energy, Our Future” link. On the website, click on Our Energy, Our Future, and you can automatically send letters to your local members of Congress, letting them know that they need to oppose cap-and-trade bills, preserve RUS funds and protect captive rail shippers. If your Representative or Senator already supports these stances, a “thank you” message will be automatically sent to them.