Managers Comment

IMPORTANT UPDATE!! June 26, 2009

For an update on the Waxman Markey bill, an article published by Sondra Boykin of Western Farmers Electric Cooperative, that addresses the Climate Change legislation please click here.

A number of changes have occurred over the past years but probably none will have the effect on electricity costs as the new legislation that is expected to occur in the near future. Global warming stands out as being the most prominent issue that will induce these new costs. Legislation allowing a Carbon Tax on Co2 emission stands to affect costs especially for coal generating facilities. These costs will be imposed on consumers as a tax on their electric bills. Western Farmers Electric Cooperative and Southeastern Electric Cooperative will be required to collect these dollars from our members and the dollars will be remitted to the United States Government. At this time no one knows how much these costs will be even though we continue to hear different dollar amounts per ton of Co2 emitted. Below is a table complied by the Association of Electric Cooperatives from information they have received from the National Rural Electric Cooperative Association predicting the affect of various dollar amounts per ton. The information is based on a normal average consumers electric bill using approximately. 1100 kwhr per month.

Predicted Effects of Carbon Tax on Consumers Based on 1100 kwhrs Monthly

This is a Carbon Tax To Be Imposed by The United States Government on the Electric Industry.

By looking at the chart at the left and under the column WFEC you will see that if a $20 cost per ton were imposed on Co2 emission it would cost a member using 1100 kwhr per month an additional $13.17. An increase of 11.38% on the average consumer electric bill.

The latest prediction I am aware of is the implementation of a $20 per ton tax and ascending to $50 per ton within a few years. That would equal an additional $32.92 per month on 1100 kwhr or an increase of 28.45% over present costs.

I urge you to visit the link below and join the campaign to keep electric costs affordable: https://www.ourenergy.coop/ . From this point, click on "Join the Campaign". From that page, send an email to your legislators and ask them to support the effort to keep electric rates affordable. They will listen if they know the concerns of the people they represent.

Changes to Southeastern Electric's Line Extension Policy

As mentioned in the article above it is the objective of Southeastern Electric's Board of Directors, myself, my staff and every employee here at Southeastern Electric to keep electricity as affordable as possible. But we must also weigh the policies and procedures closely to make sure we are keeping charges equitable among our members. Southeastern Electric's Line Extension Policy is one such policy that must be given thorough attention and thought as to how it is implemented. When I first began working at the Cooperative in 1977, I remember we would extend a line for the cost of $10. A few years later it was changed to a dollar amount for the first pole and another set dollar amount for any additional poles installed. The member would then get that amount paid credited to their electric bill. Sometime in the mid 80's our policy changed to where the member requesting line extension was given a footage allowance for a residential account. That footage amount was 300 feet for a residential service, and that policy has been in effect since that time.

Southeastern Electric Cooperative is a nonprofit organization meaning that any margins made during an operating year are allocated back to the members participating that year. Southeastern Electric is NOT a dollar self-sufficient organization however, meaning that money needed to build new line and make system improvements to ensure quality service to it's members must be borrowed in addition to any yearly margins. Most of the funds are borrowed from Rural Utilities Service (RUS) which is a division of the United States Department of Agriculture. The remainder of the funds are borrowed from the National Rural Utilities Cooperative Finance Corporation (CFC). Most of the notes are borrowed for a period of thirty years at a competitive interest rate. The interest expense paid back to these organizations is one expense in Southeastern Electric's retail rates to it's members.

After reviewing the present line extension policy and with input from myself, my staff and the Board of Directors several changes are being made effective June 1, 2009. The most important things we tried to keep in mind was, as I mentioned above, afford ability and equality among all members. The afford ability can be gauged not only by the out-of-pocket expense that a member will incur from a line extension, but also by the value of the electrical service provided. By more of the cost being paid up front for new line extensions, less loan funds have to be borrowed thus reducing interest expense for all members. This is a more equitable approach for all Southeastern Electric's members.

Costs for goods and services has increased in the past years and it is unavoidable that companies have to increase their costs to do business or the way they do business. I believe we have made appropriate changes to the Line Extension Policy and that the changes are equitable to all members.

At Southeastern Electric's April Board Meeting, the board approved the 2009 brush spray program. The area to be sprayed this year is the Lane Substation Distribution Lines . A notification to our members was inserted in S.E.C.'s May newsletter, the Circuit with this information also. Chemical spraying of brush is a very important part of S.E.C.'s Brush Control program in a number of ways but it all comes down to cost. We can spray the brush while it is small and prevent the more expensive alternative of clear cutting later on. Our brush program is a combination of clear cutting and spraying and S.E.C. spends approximately $1,000,000 yearly for right of way clearing. This years spraying project will schedule approximately 134 miles of line to be sprayed.

If you have questions or comments you may e-mail me lspeaks@se-coop.com or phone me at Southeastern Electric Cooperative 580-924-2170.