Five electric distribution cooperatives have joined forces to secure a favorable wholesale power supply contract on behalf of their members.
The purchasing group, called 1803 Electric Cooperative, Inc., represents more than 130,000 electric cooperative members residing primarily in rural areas across the state.
The coalition came together with the common goal of gaining greater leverage in the wholesale power supply marketplace. Presently, all five electric cooperatives are under contract with Cleco Cajun (formerly Louisiana Generating). Those contracts are set to expire in 2025.
According to 1803 President Charles Hill, landing an attractive wholesale contract is critical to keeping rates low for electric cooperative consumers. Hill is also general manager of Washington-St. Tammany Electric Coop, based in Franklinton.
Hill said power supply costs for electric distribution cooperatives represent roughly 75 percent of a consumer's bill.
"This is a huge percentage of what cooperative consumers pay to their cooperative each month," Hill said. "It's imperative that we get this right for our members and to ensure that we continue to provide power that is safe, affordable, reliable and accessible."
The new cooperative entity has hired ACES to assist in navigating the wholesale power supply marketplace. ACES is a premier energy management consultant in the power supply industry and works with electric cooperatives and other utilities across the country to offer expertise on issues such as transmission, legislative and regulatory requirements, renewable portfolio standards, industry trends, risk management and more.
Hill said opportunities abound as Louisiana is part of a regional "power pool" where generation companies add to the pool and customers, such as 1803 Electric Cooperative, extract electricity from the pool as needed under specific contractual terms. The task of ACES, Hill said, is to offer technical expertise and guidance, and to assist in negotiations with suppliers to obtain the best wholesale prices. The purchasing group includes Beauregard Electric (DeRidder), Northeast Louisiana Power (Winnsboro), South Louisiana Electric (Houma), Claiborne Electric (Homer) and Washington-St. Tammany Electric (Franklinton).
Hill pointed out that average electric utility rates for Louisiana residents are already among the lowest in the country, but preliminary studies show that reductions may be available. The average residential rate in Louisiana is below 10 cents per kWh. By comparison, the average residential rate in states such as Maine, Connecticut, Rhode Island and Alaska is more than 20 cents. The highest cost per kWh is 32.5 cents for residents of Hawaii.
Hill said sub-market rates for Louisiana residents is the result of savvy strategic
planning in the past by electric cooperative boards, managers and employees. The new group is already hard at work to make sure rates continue to remain as low as possible, he said.
"Low rates have the effect of putting real money in the pockets of our members each and every month. Over the years, our members have had the advantage of keeping literally hundreds and thousands of dollars to themselves compared to people in other states," he said.
"The less we have to pay for electricity, that's more money people have to spend on food, education, clothing and other things."
Hill added that low rates also foster an attractive environment for new and expanding businesses to come to the state, providing wages and paychecks for families while expanding the tax base.
He explained that the new group's name was inspired by the historic purchase of the Louisiana Territory by the U.S. Government in 1803. The deal enabled the U.S. to acquire 828,000 square miles of land for $15 million, a transaction seen as a pivotal event in the growth, expansion and prosperity of the country.
Hill said the group is working to land a deal of its own that will also prove to be a great advantage for cooperative members.
"It has taken us a lot of work and attention to detail, but it's something we have to get right for our members," Hill said.