Rappahannock Electric Cooperative sent a high-powered team of executives to Clarke County on Tuesday to address both its billing rates and electricity reliability. However, REC’s availability to field questions and concerns failed to lure any members of the public to attend the meeting.
REC president and chief executive officer Kent Farmer in his address to the Clarke County Board of Supervisors used the opportunity to recap of his company’s first year as power-provider at a 1:00 pm public meeting.
“We are back in Clarke County today to see if we are meeting your expectations,” Farmer told the supervisors.
On June 1, 2010, REC took over management of power operations after purchasing the electricity service area formerly administered by Allegheny Power. The service area, which includes most but not all of Clarke County, includes portions of 22 Virginia counties and provides power to 155,000 customers.
Farmer, accompanied by a team of REC executives ready to field questions from Clarke residents and the supervisors, recounted that REC got off to a shaky start in its first few weeks on the job.
REC board member and Clarke County resident, Christopher G. Shipe also attended the meeting.
“We had an immediate problem with equipment last summer,” Farmer said. “Then later we were hit by snowstorms in February. We can’t do much about the snow, but we are continuing work on improving the right of ways for our power lines,” Farmer said.
Farmer said that he believes that it will take three to five years to improve the power line right of ways to the level that REC requires.
In addressing electricity rates and complaints by local residents of unexpectedly high power bills, Farmer said that rates had not changed because REC rates are governed by state regulators.
However, Farmer said that rate increases are just around the corner.
“We have not increased our rates,” Farmer assured the supervisors. “REC is still billing at the same rates as when you were with Allegheny Power. The problem is that when it is a lot hotter or colder consumers use more kilowatt hours of electricity.” Farmer blamed the increased power usage on extreme weather conditions.
“It was a lot hotter last summer and a lot colder last winter than it has been in the last three to four years,” Farmer said.
Given that extreme temperatures can play an unpredictable role in power bills, a more predictable, if unwelcome factor, is about to be added to the power usage formula. Farmer said that REC’s rates will increase by 7.5% on July 1st for Clarke County residents and other REC members. Farmer added that consumers will see a 30% rate increase over the next four to five years.
At least one county supervisor was alarmed by the projected rate hikes.
“How did you manage to get a 30% raise in your rates in hard times like these?” exclaimed supervisor Pete Dunning (White Post).
“The rate increase is based on what had already been negotiated by Allegheny Power before we purchased the service area,” Farmer replied. “Right now you have a better rate than what you would have had under Allegheny Power’s plan which would have immediately raise rates by 30%.”
Farmer said that REC customers are benefiting from its decision to spread the already-approved 30% rate increase over several years. “Right now you’re paying 30% less than everyone else in the state for your electricity,” Farmer said.
Farmer added that some of the local concern about higher bills may be caused by REC’s accounting process which emphasizes actual monthly meter reports instead of Allegheny Power’s approach which often produced bills based on estimated power meter readings.
“That may be, but a lot of people right now are having a rough time making ends meet,” Dunning replied. “What are the main things that people can do to lower their electricity bills?”
Farmer said that REC customers had several options for decreasing electricity bills including increasing home insulation, installing “smart” switches on water heaters and purchasing energy efficient appliances.
“But whatever you do,” Farmer said to Dunning. “Do not take that old refrigerator that you replace and put it in the garage to keep your beer cold. If you do you’re not going to see your bill go down.”
Farmer told the supervisors that REC will install smart switches on water heaters at no cost to consumers as a painless way of reducing energy bills.
“The hot water switch allows REC to remotely turn of a hot water tank during peak demand periods,” Farmer said. “40% of our peak power demand costs are based on just one hour of each day. Our intention is to manage that peak demand with the help of our members in ways that they never have to see.”
Farmer said that 30,000 REC members are already allowing REC to manage their hot water heaters through remote access using smart switches. Farmer also said that REC members can receive a free energy audit from the utility provider to help pinpoint energy saving opportunities within a home or business.
“One of our people will come to your home and go through it with you to help pinpoint places where you are losing energy,” Farmer offered.
Farmer described other innovative technologies strategies that REC is using to improve its operating efficiency like smart power meters that can be read remotely and that automatically report power outages. Farmer also said that REC’s electricity procurement strategy, which includes an 11% ownership stake in power provider Old Dominion Electrical Cooperative which runs the nuclear North Anna Power Station located in Louisa County in central Virginia, is key to keeping power rates manageable.
“The North Anna plant is producing power at half the price of electricity on the open market,” Farmer said.
But Supervisor David Weiss (Buckmarsh) appeared unconvinced after listening to Farmer’s explanation for service outages and power bill increases.
“The machinery on my farm is handled by a separate meter,” Weiss noted. “The electricity bill for my machinery went up and it had nothing to do with the cold or the heat. Maybe some of it had to do billing estimates but Allegheny Power came out pretty regularly.”
Weiss also pointed out that he rarely lost power under Allegheny Power but power outages are more frequent now that REC has taken over the service area.
“We are trying to invest our money in better equipment and maintaining the right of way,s” Farmer replied. “It’s going to take a while to get the system up to REC’s standards. Our goal is to provide reliable, environmentally friendly power at the lowest possible cost.”
Supervisor Chairman, Michael Hobert (Berryville) asked Farmer whether REC was working on other initiatives that might assist county residents, like broadband access.
Farmer replied that while REC is looking at providing broadband services, its most recent foray into the market had not been very successful.
“REC is an investor in an initiative called Virginia Broadband, but it hasn’t worked very well,” Farmer said. “We are now looking at other alternatives for offering broadband to our members. We haven’t given up yet.”
Hobert also pointed out that REC’s smart meter service, for which members pay $3 per month so that the utility provider is automatically notified of power disruptions, has a benefit to REC as well the consumer.
“I ask that you reconsider the monthly charge for the smart meter service because consumers are already paying REC to provide their power and it’s in your best interest to know as soon as possible when power is out to a customer.”
Farmer agreed with Hobert’s premise and promised that the company would give the request further consideration.
As a member-owned cooperative, REC is managed by directors elected by its customers. According to “Rappahannock Currents,” REC’s newsletter, three positions for board of director will be filled at its annual meeting in August. Completed nomination forms for board of director candidates must be endorsed by at least 25 signatures of other REC members in good standing and be returned to the office of president of REC no later than 5:00pm on May 5, 2011.
Rappahannock Electric Cooperative’s annual meeting will be held on August 13th and is open to all members. Details of the meeting location will be available on the REC website or by calling 800.552.3904.