When President Franklin D. Roosevelt created the Rural Electrification Administration in 1935, the vast majority of American farmers were still using kerosene lanterns and wood-burning stoves. Unlike their urban counterparts, rural residents had little access to electricity.
That quaint image has changed drastically in the past 50 years, though.
"Now, the coops are playing like the big boys," says Scott Allegrucci, director of the Great Plains Alliance for Clean Energy. "They're serving hundreds of thousands of people."
But, thanks to Gov. Mark Parkinson's coal capitulation, they won't be regulated like the big boys -- no matter how big they get.
When it comes to electric rates and energy projects, investor owned utilities, like Westar and Kansas City Power & Light, have to face the Kansas Corporation Commission. They're required to make all their financial and planning documents public. They have to prove they have legitimate cause to raise rates for their consumers.
That hasn't been the case for the smaller, rural electric cooperatives. Unless they served more than 15,000 customers, they could simply opt-out of being regulated.
Parkinson's Comprehensive Energy Bill changed that. By deleting three lines from the law, the 15,000-customer cap disappeared. Now, any REC can deem themselves above the scrutiny of the KCC.
"It was a piece of candy for the Sunflower lawyers," Allegrucci says.
Sunflower is actually an aggregate of six separate cooperatives. One of their members, Pioneer Electric, was just above that magic number, boasting 15,700 customers. Another, Western Cooperative Electric, was starting to inch into regulated territory, with more than 11,500 customers.
Good time to change the law.
Now, even companies like Sunflower, that fill campaign coffers and construct huge coal-fired power plants, won't have to justify their actions to the KCC.
That worries Allegrucci. Sunflower doesn't have a stellar financial record. According to newspaper reports, in 2002 the company petitioned the KCC for an 8 percent rate hike because the first coal-fired power plant in Holcomb had plunged the company more than $900 million dollars in debt. Should their rate-payers trust that the second plant will be different?
"They've been flirting with bankruptcy doing exactly what they're doing now -- building coal-fired capacity," Allegrucci says. "If this is a mistake and they go bankrupt, who pays?"
Steve Miller, Sunflower's spokesman, doesn't think Kansans should be concerned. He says that customer cap provision was removed because, in the past two decades, "there have never been any complaints by any consumers." (Thankfully, there is a clause in the bill that allows KCC to step in an investigate rates if 5 percent of the coop members sign a petition.)
Miller doesn't buy the allegation that customers will have to stand by helpless while the company potentially runs itself into the ground, either. "You'd have to conclude that coops are not smart enough to manage their own interests," he says.
Unfortunately, we'll just have to wait and see.
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Umm.. Yeah. Energy demand is not going down. It tends to follow population growth. And given that worldwide, roughly a quarter of the population does not have access to electricity, (ie third world countries) demand on both the micro and macro scales are increasing. Secondly, over-capacity is a function of the nature of electricity. It's the only commodity that is consumed in exactly the same quantity as it is produced, at exactly the same time it is produced. If you build a power plant for average electric consumption, you will have rolling brown outs in high demand periods (hot days in the summer). You build the power plant with hot day consumption demand capacity in mind. Physics and engineering. Look it up.
The article is factual, not enviro �scare tactics.� Sunflower Elec. has already burdened ratepayers doing exactly what they're trying to do now - build coal plants.
Scare tactics are remarks about the lights going out and businesses being shut down if the plants aren�t built. Energy demand is going down and the electricity industry is dropping coal plants voluntarily because of the risks of overbuilding capacity. Dynegy recently dropped its own plans to build 5 coal plants, and the following day their stock rose by 19%. It appears Sunflower, who as this article indicates has had serious financial struggles, knows something the rest of us don�t, or the legislature just paved the way for another financial debacle that will fall on ratepayers.
Meanwhile, it's in the best interest of the electric customers to approve the rate hike. If the coop goes under, there is no electricity ... AND consequently, no industrial or commercial business supported by electricity (ALL BUSINESS STOPS!) If the coop is operating in such a way that it has their consumer base worried that they will go bankrupt, it means it is an efficient capitalistic business that is operating with non-for-profit or minimal-profit boundaries. Which is exactly what should be happening. This article is scare tactics by the environmentalists. Much-Ado-About-Nothing.
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