Welcome to the inaugural issue of Powerline California, a monthly publication designed to keep members of Golden State Power Co-op and their friends and associates informed about issues affecting electric cooperatives in California.
While this newsletter will feature energy issues, people and events in California, it will also keep you up-to-date on federal power issues. Fortunately, we have the National Rural Electric Co-op Association ("NRECA") protecting our interests at the federal level. But it's a team effort. The work California co-op officials do to make California more "co-op friendly" helps our friends at NRECA who work with Members of Congress from California and all states to protect the interests of nonprofit, consumer-owned electric co-ops.
At a time when many powerful politicians in Washington, D.C. and elsewhere are still pushing for deregulation of the electricity industry, and when the Federal Energy Regulatory Commission ("FERC") is rewriting many of the laws for how electricity i s sold and delivered in America, it's important for all of us to keep an eye on both Sacramento and our nation's capitol.
We will also be encouraging our readers to become members of NRECA's ACRE program. That's the "Action Committee for Rural Electrification." For as little as $25 per year you can be a member and participate with tens of thousands of other electric co -op supporters from across America as all of us stand tall, united under the ACRE banner, to defend the interests of electric co-op members in 47 states.
The first issue of Power Line will be emailed to some 200 co-op supporters in California and around the Pacific Northwest. If you know of others who might like to receive it, please e-mail the editor, Aaron Jones, at ajones77@aol.com. Or if you have story ideas or questions, send them along, too. Our goal is to publish a monthly newsletter that will summarize our political activities and other accomplishments on a regular basis. We will also provide other timely updates on our website: www.gspower.org. In fact, each monthly issue of this web-based newsletter will be a "work-in-progress" during the month so check in often. And check the links to other "co-op friendly" websites, featuring our members and business associates. And now for the fun stuff...

PEOPLE ARE ASKING..."WILL DEREGULATION RETURN TO CALIFORNIA?"

With Enron and other scandals still clearly visible in the rear view mirror, and with California ratepayers and taxpayers still on the hook for billions of dollars to pay for the first disasterous attempt to restructure California's electricity industry, it's hard to imagine that any Californian would suggest we give it a second try. But some are. They claim the first "experiment" was poorly designed and, consequently, deregulation didn't get a fair chance to create competition, improve efficiencies and reduce electricity rates as advertised. Some say lessons learned the first time around will assure success next time. And they point to continuing efforts at the federal level, especially the actions of the Federal Energy Regulatory Agency ("FERC"), as evidence that the move towards deregulation is still alive and well. Texas and a few other states are having varying degrees of success with their restructured electricity markets, so that helps keep the pro-deregulation politicians and other advocates pressing forward. A recent report on "The California Electricity Crisis: Causes and Policy Options," by Christopher Weare of the Public Policy Institute of California notes: "Serious proposals representing almost the entire spectrum of economic philosophy are receiving significant attention. These include calls for increased public ownership of the electricity sector, a return to the system of regulated, vertically integrated utilities, and recommendations for further deregulation."

Obviously, we don't know what the future holds for California. What we do know is that the road ahead will not be easy. Despite some proposed rate reductions by a few of the larger electricity companies, mainly for larger users, electricity rates will remain at historically high levels until the billions of dollars in bonds issued during the electricity crisis are paid off (retail rates for the three major IOUs range from 10 to 25 cents per kWh depending on rate class, time of use and other variables). The best case scenario is higher rates for several years, then some meaningful reductions once the bonds are paid off. And that only happens if there are no more ugly and expensive surprises. When California's economy begins to pick up it will take a concerted effort by state officials and power plant developers to stay ahead of demand. As supplies run short, wholesale prices (which remain unregulated) could increase once again, leading to a new round of electricity price hikes.

But future problems of this sort can be avoided. In 2002 the legislature gave California communities a new tool to use in their own defense. Known as the "Comminity Aggregation Bill," Assembly Bill No. 117 gives communities the right to aggregate the buying power of local residents and businesses to buy and deliver electricity on behalf of end-use customers. If used to its fullest extent, this legislation would not only transform how Californians buy electricity, but would also give them the power to protect themselves against future price spikes. Here's how it could work. Communities could work directly with the dozens of non-profit electricity providers that already exist in California...the PUDs, co-ops and municipals...to gain access to wholesale power supplies on a not-for-profit basis. These consumer-owned utilities, through various associations like the Northern California Power Agency, already own and operate dozens of large power stations in California. With long-term power purchase contracts from additional "aggregation" communities, these same California utilities could build, own and operate the power plants California will need in the years ahead. And because these "consumer-owned" utilities and their associations focus on public service instead of profits they will keep the lights on, and the rates low, year in and year out. You might say it's the "co-op business model" at work. People working together for the common good. It could happen in California. It should. People working together for the common good is a more powerful force than competition. Both are good ways to do business, but as recent history proves, when it comes to vital public services like electricity, it's a whole lot safer to trust local companies that put public service ahead of profit than it is to trust power marketers who fly in from other states and other countries and attempt to dictate how electricity will be bought and sold in California. That model didn't work before and it won't work next year or the year after that.

AB 117 gives every community a new start and a real opportunity to do things right...a cooperative approach to meeting the needs of everyone in the community in a reliable, cost-effective manner.

ELECTRICITY COOPERATIVES AGAIN RATED NUMBER ONE BY CONSUMERS

Speaking of deregulation, residential customers in areas where competition has been attempted or is under way are less happy with their utilities, a new report by RKS Research & Consulting points out. The report ranks different types of utilities and points out that co-ops continue to win "the highest levels of consumer support" while investor-owned companies "continue to lag in key customer perceptions of value, service and performance (www.rksresearch.com)."

As noted in the co-op history section of this website, California is one of the few states where less than one percent of all consumers are served by electric co-ops. But in those few areas that do enjoy member-owned co-op service, consumer satisfaction is high. A recent independent survey of Plumas-Sierra's membership showed overwhelming approval of the co-op and attracted numerous unsolicited comments praising the co-op for the community and economic development work it does on a regular basis.

Is it a mere coincidence that the states with the fewest electric co-ops, like California and New York, also have the highest retail electricity rates?

Christopher Weare's research on the California Energy Crisis provided a clue. Historically the consumer-owned utilities (PUDs, municipals and co-ops) have charged lower retail rates for electricity than the three major investor-owned utilities -- 9.53 cents per kWh versus 8.29 cents (Public Policy Institute of California report on the electricity crisis by Christopher Weare, 2003). As a group, co-ops, despite serving low density rural areas, have maintained the lowest overall rates while maintaining high levels of reliability.

Bottom line: Having the co-op business model active in the electricity industry provides a higher degree of competition and consumer protections which results in higher reliability and lower rates, which in turns leads to a higher level of consumer satisfaction.

SPEAKING OF NEW YORK STATE..."NYSERDA" IS ON THE MOVE!

It stands for New York State Energy Research and Development Authority and it is aggressively educating consumers on energy topics, from distributed generation opportunities to farm-based renewable "clean" energy production. In late January, 2003 it sponsored an "Innovations in Agriculture Conference" that covered every topic from energy efficiency measures to manure management! Yes, small and large scale wind projects, solar and every other topic you can imagine were considered during the two day conference. And the cost...a mere $40 per participant to cover meals...otherwise state and federal government support. And cooperatives were a big part of the program. Why do we report this? Because California could benefit from taking the same approach...more consumer energy education opportunities and more consideration of the co-op business model for solving future energy problems. For more about NYSERDA visit their website, www.nyserda.org.

WIND POWER IS THE FASTEST GROWING ELECTRIC POWER SOURCE...

AND "OFF GASES" MAY SOME DAY BE ON THE GRID!

According to a January 14 report by the Associated Press ("TVA Agrees to Expand Wind Power"), wind power is the fastest growing electric power source, outpacing gas turbines, coal plants or nuclear plants. "The Energy Department lists 4,558 megawatts of U.S. wind power."

The AP report, carried on the cooperative.com website, featured the Tennessee Valley Authority and its recent agreement to finance another 28 megawatts of wind at a reclaimed strip mine site 25 miles west of Knoxville. "Although the TVA project pales compared to large wind farms in the Pacific Northwest, California and Texas, 'this is a significant commitment to wind in our region,' said Stephen Smith, executive director of the Southern Alliance for Clean Energy watchdog group." TVA also utilizes solar collectors and reclaimed landfill gas to produce electricity, as do a growing number of utilities nationwide.

California continues to be the national leader in renewable energy development, with solar, wind, biomass, geothermal and a number of other "green" energy projects coming on line every month. One environmentall friendly new source of electricity in California that won't be available in every state is "off gases" from oil wells. These are the various natural gases that are too low in heat content or too expensive to clean up and are therefore flared or reinjected into the ground. But Bob Fickes, General Manager of the California Oil Producers Co-op, is sure he has found a way to turn the problem gases into a valuable commodity. Working with Edan Prabhu and the new FlexEnergy turbine, Fickes is modifying the "Flex" turbine to burn low btu content gases and other off gases to produce electricity. The plan is to end up with a fleet of portable units that can be deployed to oil fields all across California to capture hundreds of extra megawatts of power and, in the meantime, to clean up what has been an environmental issue. Early tests of the FlexTurbine shows it can utilize a wide range of off gases and produce electricity in a competitive price range. It also works with other waste products, including animal wastes, nut shells, forest residues and the like.

IMPORTANT DATES TO REMEMBER

The Golden State Board of Directors will meet April 3 in Hollywood (place and times to be announced). A co-op seminar is scheduled for the Bay Area in August (more on that later). The Golden State's Annual Meeting will be in Reno again this year, on October 16 & 17. At last year's Annual Meeting Mr. Fielding Thompson, Chairman of the California Electricity Users Cooperative and a member of the Fruit Growers Supply management team, was re-elected Chairman of the Board, with David Coyle, manager of Anza Electric Cooperative, elected Vice-Chairman.