Ohio electric cooperatives investing in the future
When cooperatives came on the scene in the 1930s, the organizers knew little about running an electric company. They just knew how much this innovation would change their lives as the lines ran out through rural Ohio and the lights came on. But these rural folk learned quickly and many of their practices are now standards throughout the industry.
The leaders of Ohio’s electric distribution cooperatives always have had foresight. Back in the 1960s, they saw the need to have their own generation. At that time, Ohio’s cooperatives were buying electricity from investor-owned utilities on a contract basis. They reasoned that if they could build their own power plant, they could secure a dependable supply of power at a stable wholesale cost. In short, they were investing in the future.
However, even in the 1960s, it cost millions of dollars to build a power plant—much more than any single cooperative could afford. But the cooperatives banded together and formed Buckeye Power, Inc., the generation-and-transmission cooperative that is jointly owned by the 25 distribution cooperatives serving Ohio and supplies power to them. By 1976, Buckeye Power had constructed two coal-fired units at the Cardinal power plant near Brilliant on the Ohio River. These plants supplied more than enough power for Ohio’s cooperatives and stabilized rates into the 1990s.
However, by the late 1990s, Buckeye Power
saw the need for new sources of power. Ohio’s
cooperatives had been growing at the rate of
about 3 percent per year. Many of them were
gaining commercial loads and household use of
electricity was growing as computers and other
high-tech appliances became commonplace.
Buckeye Power began searching for additional
sources of affordable power. One of the
decisions they had to make was whether it
would be less expensive to buy power from
existing power plants or whether they would be
better off building a new plant. A concern was
that environmental activists were successfully
blocking the permitting process for new base
load plants across the country. It was taking
nearly as long to get a plant approved as it did
to build it, meaning any new coal-fired plant
wouldn’t come online for close to a decade.
New environmental controls also were
adding millions of dollars—more than it initially
cost to build the Cardinal units—to
Buckeye’s wholesale power costs. Since 2000,
Buckeye Power has spent nearly $900 million
to install environmental controls at its Cardinal
plant.
In light of these developments, Buckeye
Power’s board of trustees—made up of cooperative
representatives—approved a plan of small
cost-of-power adjustments every year throughout
a 10-year forecast period to pay for these
costs and to secure new sources of power.
In 2002, Buckeye built a new natural gasfired
peaking unit in northwest Ohio. The plant
was designed to supplement Buckeye’s base
load at the Cardinal plant and run during times
of peak use. Buckeye took the opportunity to
purchase another existing peaking unit in
Darke County in 2007. This was less expensive
than building another unit and the two plants
gave Buckeye an additional 710 megawatts of
power. Buckeye also expanded its base load
capacity by purchasing parts of existing coalfired
units owned by the Ohio Valley Electric
Corporation.
Buckeye Power is at the forefront of renewable energy in Ohio. It has agreements to purchase power generated by biodigesters from a poultry farm in Mercer County and a dairy farm in Williams County. Together these projects could supply enough electricity to serve more than 1,200 homes. Buckeye Power also receives up to 30 megawatts of power from a wind farm in Story County, Iowa. Finally, Buckeye gets power from the New York Power Authority’s Niagara River project. Buckeye continues to look for cost-effective sources of renewable energy to further diversify its generation mix, while ensuring that the growing need for electricity is met reliably and affordably.
Today, Buckeye Power has a mixed portfolio of generation assets at its disposal to meet the demands of its members. Coal, natural gas and hydro generation resources all contribute to the growing needs of its member-owners. Since 2000, these purchases, when combined, add more than 1,200 megawatts to Buckeye Power’s portfolio.
While nobody likes the thought of rising rates, Buckeye’s strategy of smaller incremental rate adjustments makes the increases easier for its members to absorb. At a time when many investor-owned utilities are seeking rate increases approaching 20 percent, Buckeye is instituting a $.0055/kWh wholesale power rate adjustment effective July 1. This adjustment helps cover the cost of securing additional power and the environmental equipment, fuel and transmission costs at its existing facilities.
It’s important to remember that your cooperative still has one of the lowest wholesale costs of power in the state, because 40 years ago it had the foresight and vision to join with its neighboring cooperatives throughout Ohio and form Buckeye Power. This decision, like these today, ensures the future can be one of affordable reliable power.
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