Why electric co-ops in the Heartland will be raising their rates

Why electric co-ops in the Heartland will be raising their rates
By: Kathy Sweeney
Missouri co-op customers - get ready! Your rates are going up and no one's sure yet how high they'll go.
Tens of thousands of customers all across southeast missouri will soon see some big rate increases.
To find out why, I sat down with Stan Estes, manager of the Ozark Border Electric Cooperative in Poplar Bluff. Ozark Border serves 37,000 members in parts of 11 Missouri counties. Estes explained what's coming by taking me back to the late 1970's. Electricity shortage concerns back then led to the building of new power plants, like the one in New Madrid. "That gave us more power than we needed back then. and we've used that extra capacity up," Stan tells me, "and we're at a point that the country and our co-ops in Missouri, we're going to have to build a new power plant in Missouri."
Associated Electric, which provides power to the Ozark border, Semo Electric, Black River, and Pemiscot-Dunklin co-ops, wants to build a new power plant at Norborne, Missouri at a projected cost of $1.7 billion. But even before that happens, Ozark Border and the other co-ops are paying for higher coal transportation costs. They're also paying to get older plants like New Madrid up to environmental standards. That's why the rate increases will start early next year and continue over the next several years.
"It's going to affect members, it's going to affect businesses, it's going to effect everybody," Stan Estes says.
Missouri forge in Doniphan is Ozark Border's biggest customer. The business heats 20 million pounds of steel each year at 2300 degrees farenheit. "The steel is heated electrically," plant owner Mike Wicklund tells me. "Our equipment is run electrically, so we use a lot of electric power."
In fact, Missouri forge uses so much electricity, the company actually drops off line during peak hours in the summer to help keep all Ozark Border bills down. Mike Wicklund stays in constant contact with his co-op, so he knows these rate increases are coming. "Is there a certain increase that would really do you some damage?," I asked Wicklund. "Well, obviously, if it went up over ten percent that would have an impact on us, significant."
It's been nearly two and a half years since Ozark Border raised rates. That increase--ten percent. Will Mike Wicklund and the rest of the co-op members face that same hit again in just a matter of months? "I'm not sure what month," Stan Estes says. "We haven't made that decision, nor the amount. We know for sure we're getting an increase in 2008 and it will be in the early part of 2008." "For us, we hate to have to increase our costs, prices we charge our customers anytime", Reuben Jeane from SEMO Electric says. But, Jeane feels now is the time to break that bad news to his 16 thousand customers stretching across portions of six counties. "We're anticipating a rate increase in '08, the exact amount we're not sure yet, but we're predicting between ten and fifteen percent residential rate increase for 2008."
Jeane agrees with Ozark Border chief Stan Estes, the increases will come starting next spring and will hopefully be stretched out over the next several years. And he points out, a 10 to 15 percent hike will only cost the average SEMO home customer just 12 to 16 extra dollars a month.
But, New Hamburg business owner Jenny Grojean says when semo electric raised rates 10 percent last fall, it hit her right in the wallet. "Our average electric bills are $500-1000 at the business and at home, $150-200, and we seen a big difference.
And, she fears what's ahead for her business and her town as rates head higher over the next several years. "That's going to make it tough, especially for a business, a small business," Grojean says. "It's hard to do that. We're on a budget like most people are. It's going to make it very difficult."
The co-op leaders in southeast Missouri won't know just how high the 2008 rate increases will be, until they find out how much their associated electric rates will go up. That information is expected to be released this fall. Stay with Heartland News for the latest information on this developing story.