Sept. 13, 2010
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Comparing our local electrical cooperative
Guest Editorial I was recently asked by Scott Wright of The Post to talk about how Cherokee Electric compares with other Alabama cooperatives. I am happy to do this because we have one of the healthiest and most up-to-date cooperatives in the state. First, I will address our rate comparison and use the rural electric average residential revenue per kilowatt hour (kwh), which is provided by the National Rural Electric Cooperative Association in Washington, D.C. This data compares the 22 electric cooperatives in Alabama and also includes Alabama Power in the comparison. Cherokee Electric ranked No. 10 in cost per kwh at 10.1 cents. The 22 Alabama cooperative rates ranged from 8.11 cents to 13.7 cents, with Alabama Power at 9.71 cents per kwh. Currently, the Tennessee Valley Authority (which provides power to Cherokee Electric) uses a fuel-cost adjustment which will cause the wholesale rate to change on a monthly basis. This adjustment is shown on your monthly power bill. As an example of what causes this fuel cost adjustment to increase, Brown's Ferry nuclear facility recently cut production by 50 percent because of a state regulation which limits water temperature in the river to 90 degrees. With the recent heat wave the upstream temp was over 89 degrees without any discharge from the plant, thus resulting in the production cut at Brown's Ferry. To meet the demand while reducing Brown Ferry's output, TVA had to purchase available power on the electric grid, typically from providers that produce electricity with natural gas. Both options increase the cost of power, and this increase is passed on to consumers in the form of a higher fuel-cost adjustment. Debt and equity is a top priority of management and the Board of Directors at Cherokee Electric. Prior to 2003, our debt had climbed to over $32 million. This placed a financial strain on the Cooperative. The Times Interest Earned Ratio (TIER) and Modified Debt Service Coverage (MDSC) ratio measure the ability to pay principal and interest payments on debt. In 2001, Cherokee Electric ranked 20 out of 21 cooperatives on the TIER ratio and 16 out of 21 on the MDSC measurement. Through decisions and cost-saving measures adopted by management and the Board, I am proud to report that in 2009 Cherokee Electric ranked seventh out of 21 for the TIER and ninth out of 21 for the MDSC measurements. Cherokee Electric currently has a plant value exceeding $100 million, with an equity percentage of 42.45 percent. Moving from financial reports and ratios to work and improvements done in the past 12 months, outside employees completed 21,317 job assignments. Within those jobs, 652 poles were added or replaced, 151,255 feet of line was installed, 180 new security lights were installed and 254 new transformers were installed or replaced. Our crews trimmed and cleared over 400 miles of right-of-way. The after-hours trouble crews worked 1,513 outages and also repaired over six miles of line downed by tornadoes. Our inside employees processed over 288,000 meter reads, billed the members and posted the payments. This group also processed 15,600 request-for-service-connection applications and accounted for $55 million worth of annual cash flow without any outside audit infractions. Cherokee Electric also paid annual taxes to various governments and municipalities in 2009, including Cherokee County ($466,500), Centre ($221, 670), Cedar Bluff ($71,151), Gaylesville ($10,251), Leesburg ($191, 250), and Sand Rock ($27,800). We also paid over $3.1 million in taxes to the state of Alabama. In summary, I want to assure everyone who relies on Cherokee Electric that the employees and our board of directors are working to continue supplying our members with quality service at the lowest possible cost, all while keeping the Cooperative financially healthy. |