Energy rates to drop

Beginning in January, all Flathead Electric Cooperative customers will see a rate decrease in their monthly energy bills.

This is the first time since the energy crisis of 2000-01 that rates for the cooperative's large commercial and industrial members have declined. About 650 of Flathead Electric's nearly 61,000 accounts are large commercial and industrial customers.

Rates for the cooperative's 59,700 small general-service customers, including residences, have decreased by $101 a year since 2002. In 2007, members will see an additional $12 - about 1.5 percent - decrease.

On Oct. 1, Bonneville Power Administration began supplying all of Flathead Electric's wholesale power. Before that, about half the cooperative's power came from PacifiCorp.

"It was about 25 percent more expensive than Bonneville," general manager Ken Sugden said.

Getting all its power from BPA, which recently reduced its wholesale power supply rates by 3 percent, is what has enabled Flathead Electric to decrease its rates, he added.

Cooperative officials forecast that similar decreases may be possible through 2009, provided Bonneville's wholesale rates remain consistent. BPA is working with other federal agencies on a revised biological opinion, which, when completed, will describe Bonneville operations' potential impacts to threatened and endangered species in the Columbia River.

The finished project, which will be submitted in July to a judge in Portland, Ore., may affect BPA's wholesale prices, as the agency may have to pay more money to U.S. Fish and Wildlife than it has to date.

"They [rates] are not going down," Sugden said. "The Fish and Wildlife costs won't be lower. It's a question of how much higher they will be."

Until that question is answered, Flathead Electric plans to continue moderately decreasing rates for its members. This is a better solution than slashing rates, only to possibly raise them again later, Sugden said.

"We're kind of trying to balance lowering our rates and stabilizing our rates," he explained. "What we hear from our members is they want both low and stable."

While rates decline, the cooperative's equity is increasing - an impressive feat, considering Flathead Electric's 4 percent to 5 percent annual growth for the past few years, Sugden said.

When Flathead Electric bought the Pacific Power system in 1998, its equity became practically nonexistent, he said. It borrowed money to cover the cost of power stations and equipment, planning to spread repayment over the life of the equipment. But lenders wanted the cooperative to focus on building equity.

"The folks that lend money don't like to see someone who doesn't have much equity in the system," he said.

During the past several years, the cooperative has managed to build equity beyond the goal its lenders set.

"Since 2002, we have been watching our expenses and have successfully gotten our cooperative back on an even keel, considering the record growth we've experienced," Earl Messick, president of Flathead Electric's board of trustees, said according to a press release. "Our equity in the electric system has grown from near zero to over 20 percent, and our lenders look favorably on what Flathead Electric's board and management have accomplished over the last few years."

Reporter Kristi Albertson may be reached at 758-4488 or by e-mail at kalbertson@dailyinterlake.com