Thursday, November 6, 2008
Energy industry faces challenges
By BARRY BURLESON
Pricing, availability and environmental concerns are just a few challenges electric cooperatives are facing.
“And these are all causes of concern,” said Kevin Doddridge, general manager of Northcentral Electric Power Association. “But what really makes us pace and worry is the storm that comes up. Our employees have the right to leave their families and return unharmed. It’s my responsibility, their responsibility and all of our concern.”
The recent Byhalia Chamber of Commerce luncheon was hosted by Northcentral and Doddridge was the guest speaker. He talked about the past, the present and the future of the energy industry.
Northcentral was formed in 1950 with 1,500 customers, based out of Tate County. Today it serves 28,000 accounts affecting more than 100,000 individuals in DeSoto, Marshall, Tate and Lafayette counties.
He said for several years Northcentral dodged some terrible weather.
“But it caught up with us this year,” Doddridge said.
Mother’s Day brought a lot of storms - wind, rain, flooding.
“When the storm cleared, the wind picked up,” he aid. “Crews worked 23 hours straight.”
Late July brought a lightning storm to the area with 12,340 strikes. Most electricity was restored that day but some outages carried into the next day.
“A lot of equipment received lightning damage, and it can hold up for a while, but later we will start to see more effects from that storm,” Doddridge said. “The damaged equipment will reveal itself.”
Northcentral’s growth slowed some in the past year. About 1,000 customers had been added annually in recent years and that slowed to about 650.
“The good thing about that slow consumer growth is that it has given us time to ramp up maintenance and capital projects,” he said.
Those included construction of the Payne Lane substation, several line upgrades and the Automated Metering Infrastructure (AMI) project. The AMI project is more than 50 percent complete with some meters being read by the new system.
Addressing the challenges ahead, Doddridge said the industry faces many risks with rates being the big issue.
In fiscal year 2008, Northcentral spent $62 million on wholesale power. FY 2009 projects costs to top $80 million.
“It’s hard to manage costs when all are going up,” he said. “It’s an industry problem.”
It’s driven by coal. Coal prices are up 150 percent in the last year. Exports are up 50 percent with most going to China where one coal plant is built weekly. Chinese exports in 2003 were 90 million tons and 2007 and 2008 saw no exports. China consumes 40 percent of the 6.5 billion tons consumed annually. That demand is projected to triple in the next 20 years.
“Roughly 65 percent of all TVA’s 30,000 megawatts of generation is fueled by coal,” he said. “The fuel is now in international demand.”
Material costs are up, too, and supplies are tight, he said.
“We are in the fourth year of double digit material costs escalation,” Doddridge said. “Materials that took weeks, now take months, years.”
Another concern is the environment and climate change. It is demanding worldwide attention, according to Doddridge.
“Our quality of life is based on safe, clean, reliable and affordable electric power,” he said. “The decisions we make on climate change will affect significantly our economy and all Americans.
“If we are serious about climate change, we must create a portfolio of technologies. We must harness our coal resources and use technology to refine it to our advantage. We must use emissions to assist us in oil recovery in a cost effective way. Coal technology is under attack. If we don’t use it, somebody will.”
Doddridge advocates a national energy policy that contains language for new technology and especially for conservation.
“Electric cooperatives, like Northcentral, advocate measures that will save our consumers money and reduce consumption,” he said.
He said nuclear power is the most reasonable solution.
He said Congress has to deal with these problems.
“We all want a safe, natural and prosperous environment,” Doddridge said. “Cooperation, not lines in the sand, will create solutions.”
He said times and challenges change, and Northcentral will continue to change with them.
“But our mission will always remain the same - to provide the most reliable power at the most reasonable cost and to add value to our community,” he said.
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