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Co-Op Future Includes Rate Hikes, New Technology by Peter Rice, Pilot Staff Writer Curry Coastal Pilot - July 27, 2005

The electric power business in the Northwest is headed for some major growing pains.

As the population swells, more people are trying to tap into the cheap hydroelectric power generated by Columbia River dams. But that resource is all too finite, and that means the harsh rules of economics are kicking in.

"Electric rates will go up," said Werner Buehler, the CEO of Coos-Curry Electric Cooperative, the nonprofit that supplies power to Curry and some of Coos County.

The co-op, along with a consortium of other power companies, buys power from the Bonneville Power Administration (BPA), which operates the dams. It's guaranteed a certain percentage of the power generated at those dams, and one nuclear power plant.

Usually, that's enough to run air conditioners and lights from Coquille to Brookings with no problems. But at some peak usage times, often in the summer, it's not enough. Then, the co-op has to go out and buy other power on the open market, often at stiff markups, which are passed on to members.

Every new hookup in the area makes it more likely that the co-op will have to set up shop on that pricey open market.

And on the other end of the line, Bonneville faces challenges generating the power in the first place. Droughts lower the water level in the Columbia, and reduce the amount of electricity that can be generated.

There's also a movement afoot to let more water through without generating power, or even to tear down dams, on behalf of fish.

It's a far cry from past years. The dams were first created as part of President Franklin Roosevelt's New Deal, and provided massive quantities of cheap electricity to the Northwest region. They were instrumental in attracting aluminum manufacturing - a heavy electricity user - to the area, along with relatively high paying jobs.

Some historians argue that those Northwest aluminum plants - which turned out the materials for fighter planes and other military equipment - were the deciding factor in the allied victory in World War II.

"Those days are quickly coming to an end," Buehler said. What was once a vast power surplus is now almost completely consumed by homes and businesses. "This economic engine is not going to play the role it has in the past," Buehler said.

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The regional power market is changing. So is the local co-op.

"We'll be looking for every possible way to modernize," Buehler said.

Some of that has already happened. Monthly bills are mailed out and processed by outside companies, which is why the return envelopes show a Portland address.

The co-op is also starting a pilot program to automate power meters, which would save the cost of hiring people to read them every month.

The co-op wouldn't lay off the five readers, Buehler said, but would find them other jobs at the company and reduce overall employment with attrition. He hopes to have the entire system automated within four to five years.

Another option is to close an office or two, consolidating the administration in fewer locations. The co-op maintains buildings in Brookings, Gold Beach and Coquille, with a headquarters building in Port Orford.

While he acknowledged that it would save money, Buehler said he wasn't supporting it at this point: "I'm not too sure we want to be doing that," he said.

He did leave the door open, however, saying he wouldn't be surprised if members demanded it as some point as a way to keep costs down.

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Cost is a big issue with many of the critics of the co-op. The controversy seems to center around last year's hike in the so-called basic charge from $14 to $33. The monthly flat fee is supposed to represent the cost of the power infrastructure; the actual power is paid for on a per kilowatt hour basis.

"When they came up with $33, my head just said, 'what was this?'" said Don Heinzen, a retired engineer who has worked for other electric cooperatives around the west. He now lives part time in Bandon.

Heinzen has requested documents from the co-op detailing how the charge is calculated, and is waiting to hear back.

"I guess my biggest beef is that it doesn't pay to conserve electricity," added Paula Cracas, of Port Orford.

Anticipating rate increases, Cracas bought more expensive energy efficient appliances. But so far, the flat fee has gone up more than the charges for kilowatt hours.

"This is a regressive charge for people like me who are conserving energy," she said.

Buehler argues that the current scheme keeps things simple: The fixed costs of operating a power company are charged on a fixed rate basis, while the actual cost of the power depends on how much is used. He said a system preferred by Cracas would amount to an unfair subsidy of those customers who use the least amount of power.

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Controversy still swirls around the co-op, often in the northern part of Curry County. The letters to the editor page of the Port Orford News is routinely filled with critiques about the basic charge, the cost of power, and how the co-op is run. Harsher critiques can be found easily in rumor mills.

Cracas thinks one reason for the poor relations is the poverty of the northern part of the county, which is more acute than elsewhere. Flat rate increases hit low income people where it hurts.

That, and, "We have some over-educated people here," Cracas said. "We just have a tendency to question authority more."

Some critics are reluctant to speak to the press. Three people contacted for this story refused to be identified or just refused to comment.

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Despite the critics - silent or not - the co-op is headed for some new territory.

"A tremendous amount of change has taken place," Buehler said. "I think that we'll be leaner. I think we'll be more technology driven ... there are always costs associated with change, but your return on that is lower cost - longer term."