Rates

During the past year we have all been hearing about the "Energy Crisis" in California, and to a lesser extent about energy issues here in the Northwest. While we don’t believe that we will come near to realizing the issues and cost increases that our neighbors in California have been experiencing, we will be seeing a significant cost increase.

In late June, the Bonneville Power Administration (BPA) announced there will be a 46% increase in the wholesale cost of energy they supply to customer utilities such as Salem Electric. Our members will see an average increase of 28% (see the related article for details). While this is certainly significant, it is much less than the potential that had been projected, a wholesale increase of as much as 250% from Bonneville.

The BPA increase will take effect in October. At six-month intervals over the next two years, BPA will adjust their rates based on their financial situation. The cost will be based on BPA’s best estimates of the market costs and the amount of power BPA will need to purchase from the market. Since no one actually knows what those costs will be, there will also be a true-up process when the costs are fully understood. As we understand it, this "true-up" will occur in between the six-month rate adjustments. We hope to see this process bring rates back down over the next several years.

To keep the increase as low as it is, Bonneville has entered into agreements with their customers to reduce their power requirements during the next year. Most of the aluminum manufacturers on BPA’s service have agreed to curtail operations and most of the consumer-owned utilities have signed agreements to reduce power requirements by 10%. Salem Electric has entered into such an agreement with BPA. To fulfill our agreement, we will make best efforts to reduce our load. About 44% of our reduction in load will come from our 17 largest general service members. Included in this, Salem Electric itself has put plans in place to reduce our office consumption by more that 200,000 kWhs per year. The remainder must come from our residential and smaller general service members.

As part of our plan we also need our residential members to reduce their usage by 10%. To help encourage your participation, we have put together an incentive program for residential members. Members who sign up to participate will receive an $8 coupon toward the purchase of a compact fluorescent (CF) lamp. At the end of each three-month period there will be a random drawing from participating members. Four prizes will be awarded: two $500 credits for participating members who have verified savings of 10% or more and two $1,000 credits for participating members that have verified savings of 20% or more (improvements will be measured against the previous year’s usage). The credits are for the purchase of ENERGY STAR rated, energy-efficient home appliances. It is anticipated that this program will run through September 2002, but it will be reviewed quarterly.

A good place to start (or continue) your energy conservation efforts would be to sign up for the incentive program and use your coupon to purchase a CF lamp to replace an incandescent bulb. You should also contact the Member Services Department for assistance and ideas on how you can make your home or business more energy-efficient. You will find more detailed information on this program elsewhere in this newsletter.

Murray McCreary

Board President

August 2001