One of the most challenging tasks French Broad EMC’s Board of Directors has is to keep the electric rates low while at the same time ensure the cooperative has enough revenue to pay its debts.  Your board members want to make sure your electrical service is highly reliable, but at a reasonable price.

With fuel costs driving up the price of construction materials along with our power costs, it has become increasingly difficult to maintain our current rate structure.  In the past year the price of a transformer typically used to serve a residential customer has risen from $780 to $1080, a 38% increase.  Copper wire is up 230%.  Our fuel charges from our wholesale energy supplier in 2004 totaled one million dollars.  In 2006, we paid over four million dollars for the same amount of energy. 

By passing some of this fuel increase to our members through the purchase power fuel charge, cutting back where possible, and closely monitoring our financial status, we have been able to avoid a base rate increase.  In fact, the board of directors has held your rates at the same level for more than twenty years now.  In a recent survey of the 27 electric cooperatives in North Carolina, FBEMC ranked last in kilowatt hours sold per customer and second to last in customer density.  This means each member purchases less energy than at any other electric cooperative.  And we must spread the maintenance and construction costs among the second fewest number of customers for every mile of line.  To make matters worse, our rugged terrain causes our maintenance and construction costs to be some of the highest in the Southeast.  Logic would dictate our energy costs to our members should then be the highest in our state.  However, our $8.00 facilities charge is the lowest among all the cooperatives, where the average is over $14.00.  And our rate of 8.6 cents per kilowatt hour ranks sixth lowest, while the average is over 9.2 cents. 

As many of the other electrical utilities are reviewing their rates, French Broad EMC must do the same.  In today’s world, the cost of everything has gone up dramatically and this is especially true when it comes to fuel-related commodities.  As you can see, French Broad EMC has been very fortunate to have kept their electric rates constant over the past twenty years while the cost of everything else has doubled and tripled.

However, as expenses continue to rise, it becomes impossible to cover these cost increases without adjusting our rates.  Our staff has been preparing detailed financial information for your directors to evaluate in order for your cooperative to continue to operate effectively and provide high quality service.  We are currently analyzing what changes in rates may be necessary to keep the electrical service at the level our members are used to receiving and still cover the significant cost increases the co-op has absorbed.

Thank You,
Jeff Loven
Email: jeff.loven@frenchbroademc.com

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