Doddridge shares industry concerns

Chief Executive Officer Kevin Doddridge, with Northcentral Electric Cooperative, was keynote speaker at the July 20 meeting of the Byhalia Area Main Street Chamber, where he presented industry data on both supply chain and cost to operate the distribution system.

He said Northcentral always experiences growth, but it is always just a question of how much growth.

Northcentral gained 500 new customers last year, he said.

The operating revenue is over $140 million. Peak temperatures in July and August are already here. The weather pattern of high temperatures is beginning earlier in the season and lasting longer than in prior years, he said.

The extended high temperature days are attributable to the incredible temperatures and humidity as well as more days. Asphalt and concrete is causing the heat to be stored and rooftops are absorbing the heat as well.

“We don’t see recovery so much due to concrete and roofs,” he said.

Northcentral is buying $105 million to $110 million wholesale power from the Tennessee Valley Authority and has an operating budget of about $35 million, Doddridge said.

Northcentral Connect, the new highspeed broadband fiber service, is growing and has 1,500 new customers. But the company has not reached the break-even point for its fiber product, yet.

Doddridge said a similar pattern was experienced in the electric power startup.

Northcentral opened in 1950 and it was the mid ’60s before revenues exceeded expenses.

There is a growing supply chain issue in the industry, also, Doddridge said.

Bucket trucks and Digger Derricks are harder to find.

Some other expenses/concerns at Northcentral include:

• $30 million in fiber costs.

• $7 million a year in rightof- way trimming.

• $15 million more in distribution system improvements.

• uncertain budgeting because of difficulty in getting equipment. Doddridge said the budget, once figured on a yearly basis, may be looked over hard at six months now.

• ascending interest rates. Money is only borrowed for poles and equipment.

• worrisome supply chain issues.

“Demand is exceeding supply on everything we are doing,” Doddridge said.

The supply chain for transformers and poles is a concern. Shipping of transformers after ordering is 50 weeks out. Utilities are struggling to maintain inventory of supplies and equipment.

A hurricane can throw the industry into short supply.

“If we get a hurricane, it’s going to throw our supply chain in worse condition. Then there are no transformers,” he said.

• an increase in the rating of transformers by 0.2 percent pushed the rating up to 99.7 percent. The increasing standard and difficulty in getting transformers from the only provider of steel needed to build them is causing pressure on the supply chain for transformers.

“Right now, we are being asked to satisfy demand and we are not there yet,” he said.

• a decrease in use of natural gas to generate electricity. Now there are no new power plants being built because the industry doesn’t know what to build, he said.

“Right now we are in a period we need to know where we’re headed and it is very hard to plan,” he said. “The generating system and capacity to get it to us – there is incredible concern here.”

• rolling blackouts. For the next several years, rolling blackouts can be expected.

Winter storm Elliott caused a loss in East Tennessee supply and distributors had to drop 10 megawatts at a time. Doddridge said the shortage fortunately occurred over the Christmas holiday when industry was in holiday mode. He said if rolling blackouts become necessary, he hopes they can be cut down to 15 minutes as opposed to 30 minutes.

“I never thought I would see it. Nothing is being done to address growth,” he said.

• conservation. Doddridge said conservation is in the future, but “I want to sell more,” he said.

• alternate sources of generation of electricity include green power generation. TVA has a flexibility agreement where five percent of the total demand can be sourced from solar or wind. The Silicon Ranch solar company will supply Northcentral with 15 megawatts at a cheaper rate than TVA.

• reliability versus affordability as pivotal points in the industry going forward. Previously, Northcentral had to buy all its power from TVA. Northcentral will buy power from one solar provider in Byhalia and two more sites are going to be built on Highway 302, he said.

• large power plants are not being built and small nuclear plants take decades to build.

• building out the broadband for Northcentral may not be the cheapest, “But we will do it the best and safety will always be first.”

• a robust demand is the future for electric.

New horizons include investing in charging stations for electric vehicles and several sites are being looked at. TVA will pay 80 percent of the cost of construction of the station and Northcentral will pay 20 percent.

“If we are going to see growth of electric vehicles we are going to need chargers to reduce range anxiety,” Doddridge said. “If you are driving gas, you know you can go for hours and never look at the fuel gauge. When you are driving an EV, you look every 30 seconds. Charging the EV at home at night is the way to go.

“It is when you are out on the road and you add unplanned stops that you start to get nervous. It gives the community some peace of mind to have recharge stations.”

Doddridge said Federal mandates are providing incentives to have more electric vehicles. These vehicles are designed for short commutes.

With the increasing cost of operating a distribution company, Doddridge said Northcentral is still in the top 15 percent of distributors when it comes to financial stability.

Northcentral places a premium on communication, especially how the cooperative communicates with its employees, he said.

The utility has 120 employees and communication with employees is important, he said.