New Electric Provider Promises Better Service and Lower Rates

Rappahannock Electric Cooperative (REC) apologized to Clarke County customers Tuesday night promising both better reliability and innovative operating procedures designed to keep future electricity costs as low as possible. The approximately 50 people who attended REC’s  informational meeting in Berryville heard explanations for REC’s shaky start as the county’s new power company as well as its plans to limit rate increases through 2014.

Administrative Missteps Cause Shaky Start

On June 1 REC purchased 52,000 power customers and power transmission assets from Clarke County’s former electrical provider, Allegheny Power. The move substantially increased REC’s existing 102,000 customer base and vaulted it to Virginia’s third largest electrical utility.

“The acquisition was equal to 20-30 years of normal commercial growth,” Matt Faulconer, Director of Government and Community Relations, said to the audience seated in the Clarke County Government Center.

Faulconer and a team of REC executives visited Berryville to dispel concerns that the company’s purchase of Allegheny Power operations was responsible for a rash of recent power outages in the county and to offer explanations for a series of administrative mistakes that occurred as REC converted Clarke County members to its billing system.

Because REC operates as a customer owned “cooperative”, the utility uses a not-for-profit business model and refers to its energy consumers as “members” rather than customers.

Faulconer said that as part of the Allegheny transition process  REC mistakenly mailed 52,000 informational packets designed for “new” members, for example a new homeowner establishing electrical service for the first time to a residence, rather than information tailored to consumers transitioning from one electrical utility to another.

“The information certainly raised some eyebrows and we apologize for the mistake,” Faulconer said.

The package incorrectly requested a $15 connection fee and a two month security deposit from each of Allegheny Power’s previous electricity customers. The error cascaded into additional problems for REC as phone lines were jammed for days with members calling to inquire about the erroneous charges and making it difficult to reach REC by telephone.

Faulconer reaffirmed at Tuesday’s meeting that the connection charges and deposit requirement do not apply to Clarke County members. Faulconer also said that REC has since added 23 additional phone lines to better respond to future needs.

Faulconer also described a problem that has irritated some Clarke County members related to REC’s electric service application form. Apparently REC’s electric service application form requests the member’s social security number as a primary identification number for new members. While social security numbers have been historically used for identification by many organizations in the past, most notably as the Virginia driver’s license identification number, the practice has been widely abandoned due to the possibility of identity theft and other privacy concerns.

Faulconer said that REC will accept primary identification numbers other than a social security number, however, it was not immediately clear from last night’s meeting how difficult such a change might be for members concerned about information privacy.

While rising power costs are typically attributed to increases in the cost of oil or increasing demand for power, Faulconer alluded to a less-often discussed issue Tuesday night; public utility efficiencies.   Faulconer said that while attempting to send new member applications to customers acquired from Allegheny Power, nearly 15,000 applications were undeliverable by the US Post Office. Whether or not the 15,000 unreachable Allegheny customers were receiving power but not necessarily a monthly power bill is unclear.

Recent Clarke County Blackouts

At Tuesday night’s meeting REC officials openly agreed that its June 1st introduction to Allegheny Power’s Clarke County customers started off on the wrong foot administratively. Subsequent power interruptions that commenced on June 24th, coinciding with the hottest temperatures so far this year, did little to improve REC’s standing with an already irritated client base.

Asked if the power disruptions were an example of operational transition problems, REC District Manager John Crawford said there was no connection between the Allegheny Power takeover and the outages. “It was really nothing more than a case of very bad timing.”

Crawford explained that Berryville and Clarke County are served by two transmission substations; One substation at Double Tollgate and another at Old Chapel. (In electric cooperative parlance, “Old Chapel” refers to a substation located near Clarke County High School and is not associated with the historically better-known Old Chapel located further south of Berryville.)

According to Crawford, the initial power outage occurred when a cable splice failed at the Old Chapel substation, Berryville’s main power supply, midday on June 23th. REC immediately re-routed power through its Double Tollgate substation while repairs were made at Old Chapel. However, a second splice failure in the early morning hours at Double Tollgate, coinciding with the Old Chapel substation already being off-line, left Berryville and much of Clarke County in the dark.

Crawford said that once the Double Tollgate substation problem was repaired REC decided to proactively replace much of Old Chapel’s 20-year old transmission cable inherited from Allegheny power.

“Most of the repair work occurs in enclosed, underground vaults and requires special rescue equipment and forced air ventilation,” Crawford said. “Once all of the necessary equipment is in place it still takes about two hours to repair a defective cable splice.”

Crawford said that in total, 13 cable splices were repaired during the late-June power outages.

Crawford said that REC takes an active approach when it comes to preventive maintenance and believes that REC’s maintenance philosophy will pay reliability dividends in the future. So far the cable fixes seem to be working.

Crawford cited several additional Clarke County specific changes planned by REC:

Immediate right-of-way maintenance to ensure that power lines are clear of brush and trees (an operational cost that had been significantly cut-back by Allegheny Power according to REC)

– Replacement of old distribution equipment the Berryville substation

– Construction of new distribution circuits at Old Chapel and Double Tollgate substations to better balance the electrical load to the Berryville substation

– Replacement of the eleven miles of transmission lines between Double Tollgate and Berryville

Community Questions

Despite the service interruptions and administrative problems, citizens at Tuesday night’s meeting seemed receptive to REC’s explanations for the problems and pleased by the company’s commitment to better service in the future.

Clarke County Board of Supervisors Chairman Michael Hobert asked whether REC had the financial resources necessary to make the needed infrastructure improvements that had been cited earlier in the evening.

Hobert: “Has REC done an inventory of all of the equipment and infrastructure throughout Clarke County?”

Faulconer: “Yes we have.”

Hobert: “How does REC plan to address financing the cost its Clarke County workplan?”

Faulconer: “There is a government program that allows electrical cooperatives to borrow money for infrastructure improvements and then pay the money back. The funds have already been approved.”

Marshall resident, Rob Marmet, campaigning for an elected Board of Directors position in REC’s “Region 2”, used the meeting to educate citizens who may be new to the public cooperative experience.

“As members of the Rappahannock Electrical Cooperative, you are the owners of your electrical cooperative,” Marmet said. “You have a voice in the decision making process.”

Marmet pointed out that Clarke’s new members recently received a copy of “Cooperative Living” magazine in the mail from REC. The magazine is used by REC to communicate with its member base. Marmet said that the most recent edition of “Cooperative Living” contained REC’s official Board of Directors ballot and he believes that many new members may have thrown the publication away, along with their chance to cast a vote, before understanding that the ballot was inside.

Marmet: “Is it true that members will have to go to REC district office in Fredericksburg in order to request a new ballot if they have thrown their ballot away by mistake?”

Faulconer: “Yes. Members must go in person and produce identification to receive a replacement ballot.

Marmet said that he is running for the REC Board of Directors because he believes in the cooperative system and thinks that direct public ownership is the best approach for running a good utility. Marmet also expressed reservations about plans by Old Dominion Electric Cooperative, REC’s primary electric power provider, to build a coal-fired power plant in Surry County, Virginia.

“Why does a Virginia utility want to invest in antiquated coal technology?” he rhetorically asked.

Election ballots must be received by REC by 5:00 p.m. on August 12th.

In response to a concern raised by Clarke County Building Inspector Gary Pope, REC spokesman Faulconer assured Pope that local crews are on standby for emergency service at all times.

Future Rate Hikes

Tuesday’s nights economic message was that REC plans to keep power costs low through the use of innovative technologies and techniques.

For example, when asked about REC’s policy for removing trees that threaten power lines by the Shenandoah Retreat property manager, REC offered a clear, and welcome, policy; “Call us and we’ll come and remove the tree before it falls on the line.” The policy reverses Allegheny Power’s frustrating approach for addressing tree removal only after a tree had fallen and disrupted electric service.

REC also outlined a 24-month plan to replace existing power meters with technology that allows the meter to be remotely read, eliminating the cost of a human traveling to each meter location.

Another option designed to reduce power costs for REC members is dubbed the “free water heater repair” program. REC members that elect to have a remotely controlled power saving device installed on their home water heaters will qualify to have heating elements replaced free-of-charge in the event of failure.

REC characterizes many of its planned changes are capital improvements to the delivery system intended to improve operating efficiency. Even so, REC members will see a rate hike beginning July, 2011 due to an increase previously negotiated by Allegheny power.

According to REC,“With Allegheny Power the cost was based on market price. Since the co-ops generate about half of the electricity we sell, we can pick and choose what we buy from the market and better manage how much we pay for it. State lawmakers and regulators recognize this to be a benefit for consumers. New co-op members will begin receiving that benefit next July.”

After the 2011 rate hike, REC members will not see any changes in the delivery rate until at least 2014.

REC says that although the rates for its new members will eventually change, just as rates would have if Allegheny Power still served the area, REC’s acquisition delays those changes, and any increases will likely be less under the co-op business model.

“Even though energy rates will eventually go up, in the long run we believe that the rate will be lower than if Allegheny Power still served the area,” said Ann Lewis, Director of Public Relations.

For now, REC’s newest members are grateful that Mother Nature, the world’s largest energy cooperative, has provided a reprieve from both the scorching temperatures and our area’s summer drought.  Our attitudes toward the weather and our energy suppliers are not all that different in the end; We are most pleased with both when we find ourselves thinking about them the least.