As the Year 2005 closes, we look back on the previous 12 months and reflect. Buckeye Rural Electric Cooperative made strides in improving the reliability of electric service by building two new substations, Milton and Rodney, upgrading Patriot substation, and substantially completing the new Scottown substation. We forged ahead with the FEMA project, rebuilding and strengthening major parts of our system damaged in the 2003 President’s Day ice storm.
Your cooperative avoided setting winter and summer peaks of record, thereby reducing the monetary impact on wholesale rates of a 2003 record demand event. We also resumed the system work plan delayed in 2003 because of the ice storm.
Our Lawrence County office at Linville proved to be a great success. It has evolved into a combination customer service office and satellite operations center, with linemen reporting for work there every day.
BREC’s vegetation maintenance program along utility rights-of-way also logged progress. A more aggressive clearing and herbicide-spraying plan means we are closer to our goal of achieving a 4-5 year cycle on the entire system.
The projects already described will continue in 2006, the Lord willing. We will be in the last year of the FEMA project, under which BREC receives 75-percent reimbursement for related work. More circuits are scheduled to be rebuilt as part of the work plan. More rights of way will be cleared.
What else 2006 brings is only speculation, but we know one thing: Costs are sky-rocketing. We will use over 140,000 gallons of diesel fuel and gas next year. The price hikes for fuel are already pinching BREC’s operations budget. Cost of materials – utility poles, conductor, etc. – are spiraling upward, too, as are interest rates and healthcare costs for employees.
Some type of rate adjustment will be needed in 2006, but it will not be in the range of natural gas, heating oil, or propane cost hikes. In fact, it seems feasible that we should be able, financially, to hold the line through winter so as to not unduly burden our members during the home heating season.
We are seeing other types of utilities announce rate increases in double digits: 50 to 75 percent for natural gas, 100 percent or more for heating oil, and kilowatt-hour hikes from 10-40 percent. Our planned adjustment, which probably will occur in the spring, will be less than two percent of the distribution charge portion of an average bill, and this should carry us until 2009 before another rate review is needed.
Of course, there is no crystal ball enabling us to gaze into the future and make firm predictions. We are thankful that a major rate increase is not needed, but some adjustment is required in order to deal with rising costs due to volatility of the fuel markets and the subsequent effect on all aspects of business.
Again, it appears that BREC will be able to absorb these costs until the second quarter of 2006, but then something will need to be done with rates if we are to continue the work under way and planned. Realizing that many co-op members augment their winter heating with fossil fuels and are facing steeply higher energy bills, the Board of Trustees decided to hold the line until spring before implementing the needed adjustment.
Buckeye Rates