About
Access Free Online Bill Pay
Annual Report to the Membership – 2010
September 30, 2011
The past 12 months since our last report to the membership has been a study in weather extremes. Weather extremes are foremost in our thoughts as we have gone from a record rainfall year in 2010 to enduring one of the most extreme droughts in recorded history in 2011.
In 2010, the total rainfall recorded in Lubbock was 24.76 inches. Along with the higher than average rainfalls, temperatures seldom ventured either side of average. Electric sales for 2010 were at record low levels for irrigation users and the cool, wet days brought little need for air conditioning in our homes and businesses.
As a consequence of the mild weather of 2010, the Cooperative’s operating margins fell slightly into the red for the year. Our Operating Margins were a negative $210,058 because of the low kilowatt hour sales throughout the year. It was an extreme weather event and members benefited by paying lower than average electric bills—not because our rates changed, but because they used less electricity.
Now comes the drought of 2011 and the exact opposite is happening. Since last August, Lubbock has received only 5.64 inches of moisture and since the end of October, only 0.77 inches.
In addition to the lack of rain, temperatures have soared to record levels since April of this year. In that four month period, 11 high temperature records were tied or broken. The total number of days at 100 degrees or more has set an all time high.
It has been the same everywhere South Plains Electric Cooperative serves. Childress has set or tied 20 daily high records and the days above 100 degrees continues to climb toward 60.
Long periods of excessive heat and no rain create an extreme demand for electricity and consequentially higher than average bills. Once again, our rates have not changed, but most members are seeing higher total bills because they are using more electricity to maintain their lifestyles. Increased usage is producing bills that are much higher than average, not a change in rates.
Because electric usage is so high, the Operating Margins for the Cooperative should be higher than normal. In fact, we expect our year-end margins for operations to be in excess of $1 million.
The positive signs we see from the Cooperative’s perspective is that even in extreme weather events—our rates work the way they were designed. In an average year our Operating Margins should be $0. In lower than average kilowatt-sales years, we will show a small loss and in above average kilowatt-sales years, we will show operating margins.
We have also been fortunate that natural gas, the fuel used to generate most of our electricity, has been on the low end of historic prices. Because of those lower natural gas prices, your electricity cost has been correspondingly lower. It may not seem that way when you get your bills this summer, but if natural gas was as pricey as we have seen it in the past, the bills would be much higher.
Even though South Plains Electric is a not-for-profit electric cooperative, we have to show our financial stability to our bankers. Averaging this year’s margin with last year’s loss is what we need to demonstrate our financial health to our bankers.
This summer is an extreme weather event that we hope we never have to encounter again in the future, but history tells us there will be more years like this.
The hot, dry weather affects more than your cost of electricity. The Cooperative’s total electric load has reached record levels and shows little promise of backing down in the near future. The good news is that we have the generation and substation capacity to continue to provide reliable service. Because our cooperative wholesale suppliers planned for such an occurrence, we have seen only one required cut back in our area served from the Electric Reliability Council of Texas (ERCOT) and none in the Southwest Power Pool (SPP) portion of our system. The ERCOT problem actually happened in February 2011 during an extreme cold event downstate.
Our first job is to deliver safe, reliable electric service at the lowest possible cost, but we do so much more on your behalf. We are advocating for you in Washington, D.C. The Environmental Protection Agency (EPA) wants to impose rules and regulations on our industry that will do little to help the environment in comparison to the increases in your electric bills. America’s Electric Cooperatives are at the table advocating for all consumers. I’m e-mailing legislative updates to members, so if you’d like to stay in the loop, just make sure we have your e-mail address on file.
South Plains Electric Cooperative employees and board of directors remain committed to providing you safe, reliable electric service at the lowest possible cost. We hope you recognize the dedication our employees have to taking care of your service needs, day or night, no matter the weather.