The Rappahannock Electric Cooperative’s long-term contract with a power provider is driving up its electric bills, an energy research group says.
Ratepayers who use 867 kilowatt-hours of electricity each month—the national average—could have saved from $12.14 to $20.80 per month had the co-op purchased its electricity on the wholesale market over the past three years, according to the nonprofit Institute for Energy Economics and Financial Analysis. Power prices have fallen in recent years because of the increasing popularity of wind and natural gas as sources of electricity.
The nonprofit conducted the study at the request of Repower REC, a small grassroots group launched earlier this year with the stated goal of improving the co-op’s transparency.
“What’s more, electricity market prices … are expected to remain low for the foreseeable future,” Cathy Kunkle, an energy analyst with IEEFA, said in a media teleconference Thursday with Reform REC and Solar United Neighbors. “We expect that REC members will continue to pay above-market prices for their electricity.”
The Rappahannock Electric Cooperative disputes that analysis, writing in an email to The Free Lance–Star that the contract provides stable prices in an ever-changing market.
“A snapshot of the market compared to a long-term contract is not an apples-to-apples comparison,” Matt Faulconer, REC’s director of external affairs, wrote in an email. “It’s like saying the interest rate of variable-rate mortgage is lower than the rate of fixed mortgage. It might be true today, but are you willing to take that risk over the 30-year term of the mortgage?”
The Rappahannock Electric Cooperative has more than 160,000 customers in 22 counties that include Spotsylvania, Stafford, Caroline, Culpeper, Orange and Louisa. Its disputed, 45-year contract is with the Old Dominion Electric Cooperative, a federally regulated organization that supplies electric generation and transmission to 11 member co-ops serving 1.4 million customers in Virginia, Maryland and Delaware.
Faulconer noted that Old Dominion uses a variety of sources of electricity and recently built a natural gas power plant in Maryland. In 2010, he said, the State Corporation Commission indicated that REC’s consumers have an advantage over people whose power prices are “subject solely to the vagaries of the wholesale market.”
The co-op’s large industrial members have the option of buying power on the open market, he wrote, adding: “In ten years, only one company has chosen the market over REC, indicating these highly sophisticated and analytical energy users recognize the value of stable, long-term prices.”
IEEFA based its conclusions on public financial documents—some of which it obtained through Freedom of Information Act requests—but did not have access to REC’s contract with Old Dominion. The organization’s mission is to “accelerate the transition to a diverse, sustainable and profitable energy economy,” according to its website.
Culpeper County resident Seth Heald, a co-founder of Repower REC, said he’s not sure exactly what can be done to improve the deal because the co-op denied his request for its contract with Old Dominion. “If we had them be more transparent about their finances and knew more about what the [board of directors] was doing, then we’d know better how we got into this situation and how best to get out of it,” he said.
Heald is proposing amendments to REC’s bylaws that include, among other things, letting consumers attend the now-private board of directors meetings.
His group must collect 500 signatures to put the proposals on a ballot at REC’s annual meeting next year, but the co-op has denied Repower REC’s request for a petition form. REC says the proposed bylaw amendments do not align with state code.
Repower REC is appealing that decision to the State Corporation Commission, which has a hearing scheduled for Dec. 11.