Rising costs affecting cooperatives
Published 12:00 am Sunday, June 22, 2008
It was one of the most ambitious of the New Deal projects in the 1930s, to bring electricity to all Americans no matter where they lived.
In the early part of that decade, about 90 percent of people living in cities had access to electricity. In the rural areas, the number dropped to a mere 10 percent.
In 1935, President Franklin Delano Roosevelt created the Rural Electric Administration to bring electricity to farmers and rural residents. The move was met with complaints from the utility companies and a few lawsuits. However, the federal government moved ahead and by 1939, there were more than 400 rural electric cooperatives serving 288,000 households.
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Locally, the Buckeye Rural Electric Cooperative started on Sept. 3, 1938, in Gallipolis as a member-owned, not-for-profit cooperative to serve the southeastern part of Ohio.
According to their Web site, today Buckeye Rural Electric serves 19, 076 residential and commercial customers in parts of Athens, Gallia, Jackson, Lawrence, Meigs, Pike, Ross, Scioto, and Vinton counties. There are 5,884 customers in Lawrence County.
The co-op averages seven customers per mile of line, and the current distribution system totals 2,673 miles of primary and secondary lines. It employs 60 people to maintain the system. The company buys its electric from Buckeye Electric, which generates electricity for all the cooperatives in Ohio.
While consumers are feeling the economic squeeze of higher energy costs, so does the cooperative.
Jeff Tackett, vice-president of engineering and operations for BREC, said the company is taking cost-cutting measures.
“About half the costs we can control, about half we can’t control,” he said, citing the cost of buying electricity from Buckeye Electric and taxes they pay.
Because the electric cooperative uses copper and steel so extensively, it makes the company a tempting target for metal thieves.
Recently, Tackett was at meeting with a contractor discussing eight miles of lines that had just been rebuilt. A BREC inspector went out to check the work and reported back that steel guy wires were already missing.
Transformers are also a favorite item of thieves. Recently, someone broke into a substation to get at the replacement distribution transformers stored there.
“They drug the transformers out and loaded them up, I think they got two or three,” Tackett said, adding he isn’t sure about the weight the metal cylinder but “I wouldn’t want to lift one.”
He said the cylinders are steel and filled with copper and mineral oil.
“By weight comparison, the copper is just a small amount,” Tackett said. “But steel is going for a pretty high price.”
On Tuesday night, a BREC work truck parked in Proctorville on a main road had all the equipment stolen from it.
“I’m telling you, it gets depressing sometimes,” he said.
The trouble is while the thieves get a few bucks, it costs the BREC money to replace it and the cost is passed on to the customers.
“Replacement cost can be five or 10 thousand dollars for parts and our labor,” Tackett said. “These thieves risk their lives for so little.”
The BREC is doing what it can to prevent theft. Now, when a fence at a substation even gets shook it activates a camera and a microphone that notifies someone at the BREC via e-mail that someone is at the site.
“We have to keep looking forward and finding better and quicker ways to take care of things with less costs,” Tackett said.
So the company has gone to a shorter work week, reduced travel as much as possible and cutting costs where it can.
One reason BREC is being so cost conscious is that the only money it gets comes from its customers. They don’t get any federal or state tax monies.
The big issue it faces is the one every driver feels at the pump.
“Fuel is killing on the line trucks,” he said.
For instance, a bucket truck gets about 10 miles per gallon and a big bucket truck used for digging gets about 5.7 miles per gallon of diesel, which is going for around $4.39.
“Think about it, you put 50 miles a day on the truck and it starts adding up,” Tackett said.
One of the cost-cutting measures includes employees not taking home company vehicles in the evening. They used to because if there was a line break or another emergency, the employee could go immediately to the scene.
“It’s a little bit longer time getting people back on line but the costs are affecting us,” Tackett said. “So taking a company car home is done, it’s over with.”
BREC is thinking about adding more satellite offices to store equipment and trucks for construction crews because the company headquarters is in Gallipolis.
The company has also switched to a four-day work week to keep trucks off the road.
“We get them jobs in one area and try to keep them in an area as long as possible because of the cost of fuel,” Tackett said.
And the increased, worldwide demand for metal has affected a company whose systems are based on copper and steel.
Tackett said a transformer that cost about $300 just three years ago is now priced at $1,000.
“There’s two reasons the price has gone up dramatically, one is legislation on energy efficiency and the cost of steel,” he said.
The cost of generating electricity goes up not only because of fuel costs but the cost of meeting U.S. Environmental Protection Agency regulations for air control emissions.
Another policy change that some customers may actually know about is a change in how the company disconnects service.
Before there were two types, a ‘regular’ disconnect or a retirement.
The regular disconnect was when someone was moving or that someone else was going to be responsible for the bill.
“We either get someone to put it in their name or we go and do what is called a retirement on that location so no one can rig it up so they can get electric.”
There is a good reason for it.
“We found a place where we had done a ‘regular’ disconnect. The people had been living in this really nice house for four or five years and they had never had the bill put in their name, they were just using it,” Tackett said. “Everybody has to pay for this. Our good, paying customers end up paying for everyone.”