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It hasn’t been easy, but your board and staff have remained
true to their policy of maintaining more rate stability for SE members than is
provided by Bonneville Power Administration (BPA). SE’s last rate increase took
effect in October of 2001 after the rates charged by BPA for wholesale power
and transmission costs went up by (51 percent). SE’s increase was solely for
the purpose of recovering increased power costs. Nothing was included for SE’s
increasing operating costs.
Since that time, BPA has adjusted its rates several
times, both up and down, but SE’s rates have remained the same – partially
because BPA’s rates have fluctuated in both directions, but mainly because the
co-op has worked hard to keep costs under control.
Several things are happening that will affect rates by
this time next year. First, as reported in the news, SUMCO plans to close its
Salem plants by the end of this year. When they go, a substantial portion of
SE’s revenue will go with them. In addition, while keeping rates stable SE’s
operating costs for things like gasoline, materials (poles, wire, transformers,
etc.), employee costs, and taxes, have continued to increase.
There is a common misperception that because SE is a
non-profit entity it pays no taxes. The only tax SE does not pay is the tax on
income. It pays all others including taxes on property, use of publicly-owned
rights-of-way in Salem and Keizer, revenue taxes, employment taxes, etc.
Increases in these costs have been at least partially covered, in the past, by
SE’s growth which has resulted in increased revenue.
Revenue growth has slowed over the years and the co-op
will need to recover from the substantial loss of revenue that will occur when
SUMCO closes. Finally, there is always a question regarding BPA’s future
actions. Although they recently reduced rates, they have the ability to adjust
them every 6 months and they have tentatively told their customers, including
SE, to expect an increase of 8 or 9 percent next October.
We will continue to update you on this important issue
as more information becomes available. If you have any questions, please
contact our office.
November 2004
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to Rates Index
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