A Letter from the President & CEO
Certain items, such as electrical energy and fuels, have become necessities in our day to day lives. But what can we do when the costs of these items continue to rise amid economically difficult times? It seems that things have been on “shaky ground” for a while now. The economy. Feeling secure in our own country. Relationships with other countries. Threats of terrorism. The political climate. Conflicts and wars around the world. Natural disasters.
The slightest change in external factors over which we have no control can have real consequences for Shenandoah Valley Electric Cooperative (SVEC) and its members. For example, the immediate effects of the magnitude 5.8 earthquake that rumbled through the Commonwealth on August 23 were minimal in the Shenandoah Valley, causing little or no damage. However, the temblor caused damage to the North Anna Nuclear Power Plant. How does this affect SVEC and its member/owners? Well, we get our power from Old Dominion Electric Cooperative (ODEC), and ODEC gets 12 percent of its diverse power supply mix from North Anna. Following the earthquake, the power plant shut down. North Anna has now undergone rigorous tests and inspections for re-start, and as of November 11, the facility has been given the green light to resume power production.
In the meantime, an alternate source of power was needed to replace the amount of energy lost due to North Anna’s shutdown. Unfortunately, this replacement power cost was higher than the usual cost of power from the North Anna facility. Ultimately, these added costs will be passed to our member/owners in their electric bills.
Though we were unpleasantly surprised with this unforeseen natural disaster, and faced unexpected costs, we were also presented an opportunity for a renewed appreciation of the diversity, and balance, of our power supply portfolio. Having a balance, in such uncertain, and sometimes literally and figuratively shaky times, is what your Cooperative seeks.
As cited in a letter I wrote to you in June 2007: “ … a gallon of gasoline averaged $1.40 per gallon in January 2001. Today a gallon of gas is $2.90 …” And today? Gas averages about $3.40 a gallon. This bit of information is a good segue into what we at SVEC are concerned about: costs to you for your electrical energy.
In that very same letter from June 2007, I note that SVEC “ … pays 70 cents out of every dollar it collects from its members for wholesale power.” Now? SVEC pays 75 cents out of every dollar for wholesale power. These are costs passed to SVEC from our wholesale power supplier. The other portion of each dollar goes to operations & maintenance, depreciation, interest on debt, and other various expenses for properly managing a business. For these expenses, rest assured we do everything we can to keep the costs as low as possible.
Finding a balance is important with many facets of energy and energy production. One of the main challenges power providers currently face are the environmental regulations being discussed by lawmakers at the state and federal levels. Some of these environmental standards, which are still being determined, have the potential to impact future costs.
Looking into a hazy crystal ball, it is hard to say how costly the regulations may be. It is imperative that the effects of electrical energy production on the environment are considered. There is a need to attempt to preserve and protect the environment. But at the same time, a balance must be struck: if the regulations are too stringent, there’s the potential to stymie economic recovery with significant increases in electrical energy costs.
America needs all of the energy production facilities possible, and cannot afford to have many, if any, “taken off the grid.” Another challenge is trying to balance the demand for electrical energy versus environmental concern. In some conversations, it has been mentioned that some of the coal-fired plants should be taken off-line, to reduce the amount of carbon emissions. Perhaps this could and should be accomplished, but I submit to our members that this action should not be taken without serious consideration. The closing of dated facilities is one thing, but the other part of the equation is then opening new plants to replace the lost production. Renewable energy projects are of course, great concepts – electrical energy created with less impact on the environment – but they also bring with them additional costs and concerns about reliability and the capacity necessary to meet demand.
Constructing and bringing new facilities on-line takes an enormous amount of time (and capital), and it’s not just the physical building of the plant. Just finding a suitable location and attaining the proper permitting and permissions can take several years. Then, once the actual construction begins, another few years can be tacked onto that. By the time the facility opens, it can take up to 10-15 years. Much planning must go into the decision to close a facility, as much time must be allowed to bring a new power producer online. Again, finding a balance between what is prudent and what is possible is vital.
What can you do? We want to help you keep your costs as low as possible. There are a couple of things you can do to potentially lower your electric bill. Participate in SVEC’s Load Management program. It is free, and directly results in a reduction of wholesale power costs. Another suggestion is to replace your incandescent bulbs with CFLs or LEDs. We recently sent out coupons for LED holiday string sets in your November bill, and coupons are available at our district offices for these light sets. We also offer booklets with many energy-saving ideas, which you can view on our website, or pick up at one of our district offices.
For 75 years SVEC has brought power to the homes and businesses of the Shenandoah Valley. That’s a lot of years of weathering storms, sometimes challenging economic conditions, and yes, even riding out earthquakes. But through it all, we continue to give our best, day in and day out, to bring you safe and reliable electric service at the lowest possible cost. As always and will continue to be, “We Exist to Serve Our Members.”
I have touched upon many parts of our service to you in this letter. In the upcoming months, we will be publishing an article in Cooperative Living regarding nearly all aspects of your electric service, from the generation, to transmission, to distribution – as well as some topics in between. We look forward to presenting you with this information.