For well over a year now we have been discussing how the cost to generate electricity has risen significantly.  In fact, energy costs have consistently increased over the last few years and forecasts predict this trend to continue. 

You may remember hearing on the news in recent months how TVA would be increasing its rates by 15 percent to compensate for additional unforeseen costs to purchase power.  Progress Energy and Duke Power made similar announcements about their significant rate hikes, as have the Associations of Electric Cooperatives in both North and South Carolina.  Unfortunately, French Broad EMC is not immune to these power cost increases.  We consistently evaluate our financial position; however, we too find it necessary to raise our rates in an effort to maintain the financial standards required by the Federal Government. 

The vast majority of the electricity French Broad EMC sells to its members is generated by Progress Energy.  The price of fuels it uses to produce electricity continues to steadily increase along with the expenses to operate these plants.  Environmental legislation has also imposed additional regulations and requirements on electricity generation that have driven the cost upward.

As with most electric cooperatives, power cost makes up well over half of French Broad EMC’s total expenses.  Any change in power cost impacts the bottom line significantly.  The financial outlook for 2009 power costs indicates that French Broad Electric will be paying about 10.5 percent more this year than we did last year for almost the same amount of energy.  To put this amount into perspective, consider that French Broad Electric trims about 800 miles of right of way annually and that is our second largest expense behind power cost.  The energy charge increase is about equal to our entire right-of-way budget for 2009.

French Broad EMC and its board of directors have made every effort to minimize costs wherever possible while maintaining our current level of electrical service to our members.  However, our efforts have not been enough to cover the substantial increases in power costs.  In order to pay the additional charges from our power supplier, new rates will go into effect beginning April 1, 2009.  Residential and seasonal energy rates will increase to 9.43 cents per kilowatt hour.  For an average user, this will represent about a four dollar increase per month.  Small Commercial and Large Power customers will also see the energy charge increase by one-half cent. The overall 4 percent increase will generate some of the additional revenue needed to compensate for the steep increases in our wholesale power cost. 

Even with these increases, French Broad EMC members still have competitive rates which are below the state average for electric cooperatives despite having some of the lowest customer density and highest cost of maintenance due to our rugged terrain. 

Thank You,

Jeff Loven
Email: jeff.loven@frenchbroademc.com


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