ODDS AND ENDS
by Lance Adkins
There is very little I can say about the weather that most everyone doesn't already know, both the months of June and July have been extremely hot and dry. The few thunderstorms we have experienced have been isolated, and containing high winds, significant lightning, and hail. In fact, one storm with powerful, straight-line winds downed seventeen transmission structures west of San Jon, New Mexico, and other storms associated with the same storm system downed transmission structures at neighboring utilities just east of New Mexico-Texas border.
Another fact that will come as no surprise is that kWh sales, and your monthly electric bill are on the rise. At the annual meeting of members for Farmers' Electric, and in the April issue of this publication, I noted that our wholesale power supplier, Southwestern Public Service Company (SPS), was expecting higher electric production or generation costs this year. Fortunately, the cost of fuel used in the generation of electricity has declined substantially over the past two months. In fact, fuel costs are down over a half-cent per kWh from early projections. I realize that a half-cent doesn't sound like much, however, if a Cooperative member used 1,000 kWh in a months time, their electric bill is $5 lower than we were projecting just two months ago.
While the extended hot, dry weather conditions are a major contributing factor to the record breaking kWh sales Farmers' Electric is experiencing, a substantial number of new irrigation services have been connected since the first part of the year. Historically, sales to irrigation services are one third of the Cooperative's total annual kWh sales.
In other news, I reported in the March issue that New Mexico Governor Johnson had signed legislation delaying deregulation or restructuring by five years. I also reported that legislators in Texas were considering changes to their restructuring plans in the wake of California's trouble-plagued experience.
I am pleased to report that Texas House Bill 1692 has been signed into law, delaying restructuring in non-ERCOT areas of Texas for five years. ERCOT or Electric Reliability Council of Texas, is one of three major power "grids" operating in the US. Our wholesale power supplier, SPS, is interconnected with the eastern US power grid, and not directly interconnected with ERCOT. Due to the unique situation in the Texas panhandle, legislators recognized the potential for substantial increases in power costs to consumers, rather than the intended lower costs anticipated under deregulation/restructuring. Our greatest concern was that SPS generating plants serving Farmers' Electric were planned for transfer into unregulated corporate affiliates and eventual sale. As our contracts for wholesale power with SPS extend though the end of year 2015, our members would have been exposed to unregulated wholesale power costs from very few suppliers. SPS's projections of costs to both wholesale and retail consumers after restructuring, and sale of their generating plants, were substantially higher that what we pay for wholesale power today.
In addition to a five-year delay, Texas legislation also includes substantial language for the protection of wholesale power supply contracts. At this point in time, SPS has withdrawn proceedings to transfer generation assets into unregulated affiliates in New Mexico, Texas, and at the Federal Energy Regulatory Commission (FERC) in Washington, DC.
As an interesting side note, one of the principle drivers behind deregulation/restructuring in Texas was the former Chairman of the Texas Public Utility Commission, Patrick Wood III. President Bush recently named Mr. Wood as a new commissioner at the FERC. It will be interesting to observe deregulation/restructuring issues as they evolve at the Federal level.
Lance Adkins is the General Manager of Farmers' Electric Cooperative in Clovis, New Mexico, providing electrical service to approximately 10,500 meters in New Mexico.
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