Pioneer Electric forecasts higher rates
Published 12:00 am Thursday, October 20, 2005
With approximately 33 members present, a quorum could not be established at Pioneer Electric Cooperative's annual board meeting Saturday, Oct. 15.
Gary Smith, president and CEO of Alabama Electric Cooperative, addressed the small group, making it very clear that he had no good news concerning the rising electric bills the cooperative's members have been seeing.
“The higher electricity rates are my fault and AEC's fault,” Smith said. “You should expect to see an 11 to 15 percent increase in your electric bills this coming year, another increase the following year, then the rates should begin to moderate by 2007.”
Smith said that AEC and Pioneer Electric received 40 percent of its energy sources from natural gas, and that 70 percent of the natural gas production in the Gulf Coast region was destroyed after hurricanes Katrina and Rita made landfall earlier this year.
“You see this same picture at the gas pump already,” Smith said. “I'd like for someone to sell natural gas to me at a cheaper price too, but you won't see that happening.”
Another reason Smith gave for an increase in electricity rates is that AEC has to pay more in order to get coal, and those increases are passed on to the consumer.
“We are managing the resources that we have the best way we can,” Smith said. “The problems are all over the country.”
According to Margaret Pierce, Rural Electric Member Action Committee president, Smith's explanation for the cooperative's rising electricity rates is not complete.
While Pierce was not present at Saturday's meeting, she said the hurricanes are just a smoke screen to the real reason for the rising rates.
“We know that explanation is just more rhetoric,” Pierce said. “We know that the real reason for the high rates is because of the actions taken by the board to meet the requirements of the National Rural Utilities Cooperative Financing Corporation (NRUCFC). All of this took place before Hurricane Katrina or Rita. I don't believe those hurricanes would have that kind of effect on our rates.”
Pierce said that Pioneer Electric is under contract to buy power from AEC, and for that reason, it prohibits its members from being able to buy power on an open market at possibly a better price.
In other business, Pioneer Electric's general manager Malloy Chandler addressed the group concerning questions about recent employee layoffs.
According to Chandler, approximately 12 employees, half in Greenville and half in Selma, have been laid off due to company cutbacks. He said that it was cheaper for Pioneer to have its billing processing done at a much larger processing company in Arizona. This provided a savings of .15 to .20 cents per bill.
“Plus, we have a number of people who are always late paying their bill,” Chandler said. “They are first placed on a delinquent list, and if it continues, they receive a delinquent charge on their bill.”
He said that if someone's service gets discontinued due to non-payment, a $35 connection fee must be paid first, plus any outstanding bills, and possibly a $200 deposit fee, which could increase if the delinquent customer repeatedly does not pay his bill.
Another issue of concern raised at the meeting was that of marking meters. Chandler said that the company was losing approximately $15,000 to $20,000 per year due to people purposely under-reporting their power meter readings.
“We also had about 1,000 members who simply made honest mistakes and copied the information incorrectly,” Chandler said. “We've never prosecuted anybody for stealing electricity. We just let them pay it over an extended period. A lot of the time, people would simply move away and never pay their bill.”
For these reasons, Chandler said that Pioneer now uses contract meter readers, and this has reduced the number of errors on meter reading down to less than one percent.
Chandler also said that the rates have not changed since June 2003. He said that the overall rates are based on the amount of electricity that is used over the last month, and, therefore, fluctuates according to use.
“The way we do the rates is the fairest way of doing it,” he said.