Current News
CVEA In the News......
Check out all the most up to date CVEA information in your monthly copy of Ruralite Magazine. As a CVEA member, you will receive a new issue in your mailbox each month. If you would rather not receive Ruralite or if there are topics you would like to see covered in the magazine, please contact Sharon Crisp at 822-3211 or 835-4301 or crisp@cvea.org
August 2010
Outage in the Copper Basin
At approximately 10:10 AM CVEA experienced disturbances on the Copper Basin distribution system including reports from customers of fluctuating voltage.
Shortly thereafter CVEA was notified that a vehicle struck and broke a distribution pole along the Richardson Highway north of the Gulkana airport.
CVEA crews immediately responded to the scene and have undertaken repairs. Customers on the Richardson Highway and the Tok Road north of the Hub are expected to be without power until mid-afternoon.
For more information about this news release contact Mary Ellen Bedrick at 822-3211.
August 2010
Scheduled CVEA Power Outages
Copper Valley Electric has scheduled outages for Sunday, August 8, 2010. The interruption of power will impact all CVEA members located West of the Duck Flats. It will NOT affect members on Loop Road and out the Richardson Highway.
Members will be without power between 2-4 a.m..
The outages are required for replacing the transformer at the Don Smith Substation and are necessary to ensure reliability of service to Valdez from the Solomon Gulch Hydro Plant.
If you have questions regarding this press release or any CVEA issue, please contact Sharon Crisp at 835-7005 or email crisp@cvea.org.
July 2010
Scheduled CVEA Power Outages
Copper Valley Electric has scheduled outages for Sunday, July 25 and Sunday, August 1, 2010. The interruption of power will impact all CVEA members located West of the Duck Flats. It will NOT affect members on Loop Road and out the Richardson Highway.
Members will be without power between 2-4 a.m..
The outages are required for replacing the transformer at the Don Smith Substation and are necessary to ensure reliability of service to Valdez from the Solomon Gulch Hydro Plant.
If you have questions regarding this press release or any CVEA issue, please contact Sharon Crisp at 835-7005 or email crisp@cvea.org.
April 2010
2010 Annual Meeting Highlights
Approximately 450 people attended the 2010 CVEA Annual Meeting of members held in Valdez on April 20 and Glennallen on April 22.
Members were given up-to-date information on issues that are affecting their Cooperative. CEO Robert Wilkinson gave a very informative overview of the Allison Lake Hydroelectric Project that included what has been accomplished to date, findings, potential costs to the member, and how CVEA plans to move forward. Members were also updated on recent developments including a potential wind study and Legislative issues.
In addition, Lyle VonBargen, CVEA President, was very pleased to announce that CVEA will begin accepting credit cards for payment beginning this summer!
In addition to reports, CVEA members were encouraged to ask questions about issues that were important to them and Mr. Wilkinson was on hand to respond.
Other highlights included the announcement of the Board of Director election results, the introduction of the 2010 scholarship award recipients, and the presentation of a newly produced DVD on the Idaho Youth Rally. Quinn Verfaillie of Valdez, and Keaton Shepherd of Kenny Lake, CVEA’s 2009 Youth Rally delegates were also on hand to say a few words.
Congratulations to Carl Crosman and Fred Williams who were re-elected to serve on the Board in the Copper Basin district and to Dan Stowe who was elected to serve in the Valdez district.
Sara Jones, Rachel Stumpf, Ryan Williams-Cudo, Sydnee Faulkner, Hannah Rosenkrans, Josh Lorence, Ronald Boeddeker, and Daniel Leahy were all awarded scholarships in the Copper Basin district. Valdez award recipients included Colbi Hill, Colin Irish, Kelsey LeMatta, Shelby Saylors, Quinn Verfaillie, Brett Wells, Sheila Mann, and Forest Masters.
CVEA thanked the member volunteers who served on this year’s Credentials and Election Committee and Scholarship Committee.
Several CVEA employees were recognized for their years of service to the Cooperative. In the Copper Basin, Jeanie Willford was recognized for an amazing 20 years of service and Jaime Matthews was recognized for 5 years. In Valdez, Mark Czarnecki was recognized for 10 years and Brett Stewart for 5 years.
Every person in attendance was given a nice lunch cooler full of goodies including a tasty meal and every member received a ticket making them eligible for door prizes, one of the favorite parts of the annual meeting each year. This year a whopping 69 prizes were given away to members including electronics, items for the home and outdoors, and over $1,000 in cash. The grand prize was a CVEA Beater! Barry and Ruth Rempel were the lucky winners of a Ford Bronco and KCHU Radio won the GMC Pickup!
CVEA would like to congratulate the winners and thank everyone who took the time to attend the meeting.
January 2010
2010 CVEA Community Foundation Scholarship Program
The CVEA Community Foundation (CVEACF) Board of Directors is making it easier than ever for students to get scholarships that will help them pay for the costs of higher education.
In an effort to be more inclusive, the Foundation Board removed the CVEA membership criteria as an application requirement. Now, any student or his/her parent or legal guardian need only live in a dwelling served by CVEA during the school year to be eligible to apply.
In addition, the Community College scholarship has been restructured to provide opportunities to students who are returning to college or those seeking continuing education and other opportunities for career advancement. According to Sharon Crisp, CVEA Manager of Member Services, “the intent of this scholarship is to help adult students who have a desire to continue their education, whether by enrolling full time and working towards a degree or taking a few classes that will help them in their career, but truly need financial assistance to do so.”
In 2010, $13,500 is available for CVEACF scholarship programs.
For high school seniors, the Board has authorized eight $500 general scholarships. Half of the scholarships will be awarded in each district. The scholarships are awarded for vocational, technical, apprenticeship training or a college degree program.
Students interested in the electrical industry are eligible for a $1,000 scholarship. High school seniors who intend to pursue a field of study that contributes to the development and improvement of the electrical industry have the opportunity to be awarded this scholarship. One will be awarded in each district.
The CVEACF will award two $1,500 Community College scholarships, one in each district. These scholarships are designed to assist returning students or those seeking continuing education and other opportunities for career advancement at Prince William Sound Community College. The CVEACF Community College scholarships are not available to graduating seniors.
In addition, the Board has authorized two Idaho Youth Rally scholarships, one in each district. The Idaho Youth Rally scholarship provides an opportunity for sophomores and juniors attending high schools in our service area to attend a fun-filled, week-long leadership camp and allows students to practice leadership, teamwork, and communication skills while learning about electric utility issues.
Quinn Verfaillie, of Valdez High School, and Keaton Shepherd, of Kenny Lake School, both attended the Youth Rally in 2009 and both believe that it was a fun, positive, life-changing experience and encourage all sophomores and juniors to apply.
Applying for a CVEA scholarship is easy. Simply stop by your school counselor’s office, visit either CVEA office or log on to www.cvea.org for a scholarship application packet.
The deadline for submitting scholarship application packets is 5:00 p.m., Friday, February 12, 2010.
Scholarship recipients will be decided in April by a selection committee made up of CVEA member volunteers and announced at CVEA’s Annual Meeting and at the 2010 high school and college graduation ceremonies.
For more information regarding the CVEA scholarship programs or any other CVEA issue, please contact Sharon Crisp at 835-7005, 822-5506, or email crisp@cvea.org.
November 2009
Winners of the 2009 CVEA Ruralite Cover Photo Contest
Copper Valley Electric Association (CVEA) is pleased to announce the winners of the third annual Ruralite Magazine Cover Photo Contest. Congratulations go to Robert Benda, JoAnn Benda, Stephan Benda, Susan Whitefeather, and Carl Crosman. Robert Benda won for his photo entitled Brown Bear Eating Pink Salmon. JoAnn Benda won for her photo entitled Cinnamon Black Bear Sow & Cub. Stephan Benda won for his photo entitled Sea Otter On Ice and Susan Whitefeather for her photo entitled View of Sugarloaf from the Duck Flats. Carl Crosman won for his photos Copper River Gold and Linemen on the Line.
Forty-one photos were submitted by ten member photographers. According to Sharon Crisp, CVEA Manager of Member Services, “CVEA was very pleased with the photo submissions this year. There were many of exceptional beauty”. CVEA employees helped to determine the winning photos by voting on their top six choices.
Each winning photo will be featured on the cover of Ruralite Magazine for one issue in 2010. Over 2500 copies are distributed monthly, so this means great exposure for the photographers. The six winning photos will also be posted on www.cvea.org. In addition, winners will receive $75 per winning photo.
CVEA would like to congratulate the winners and thank everyone who submitted photos.
If you have any questions or comments regarding this issue or any other CVEA topic, contact Sharon Crisp at 822-5506, 835-7005, or email crisp@cvea.org.
October 2009
CVEA Improves Reliability for Downtown Valdez
CVEA recently completed a project on the corner of Meals and Pioneer that will improve reliability for the businesses located in the downtown center on Pioneer, Chenega, Meals, and Egan.
In 2005, CVEA discovered a fault, or damage to the cable, in the area. Since that time, the businesses in this area have been receiving service through a back-up feed. While this has been sufficient, it is considered a critical condition as it significantly compromises system reliability for that section of service.
Ensuring a reliable feed to this area is a priority for CVEA. CVEA evaluated numerous underground alternatives for crossing Meals Avenue and determined that the need to cut the street, sidewalks, curbs, and gutter to find and replace cable combined with the presence and depth of underground water, sewer, and storm drain utilities made going underground neither practical nor cost effective. According to Chris Botulinski, CVEA Engineering Manager, “For safety reasons, CVEA must meet a minimum depth requirement when burying cable underground. With the utilities in the way, this depth could not be reached without likely doubling the cost of construction for the project.”
Crossing Meals Avenue aerially was determined to be the best remaining option. While less attractive to the eye than underground cables, the overhead cables are safe and effective and will provide a higher degree of reliability at a reasonable cost to the members.
If you have questions regarding this or any CVEA issue, contact Sharon Crisp, CVEA Director of Communications, at 835-7005 or crisp@cvea.org.
September 2009
CVEA Announces Third Annual Ruralite Cover Photo Contest
Copper Valley Electric Association (CVEA) is excited to announce its third annual Ruralite Magazine Cover Photo Contest. CVEA will be accepting photographs for the cover of Ruralite Magazine, CVEA’s primary member communication tool, through November 6, 2009.
Over 2500 copies of Ruralite are distributed each month and that means excellent exposure for winning photographers. “We are extremely happy to be partnering with local members to find beautiful cover photos for Ruralite. We are a cooperative owned by our members and it is exciting to be giving our members another opportunity to be a part of what we do” according to Sharon Crisp, CVEA Director of Communications.
Six lucky winners will be chosen. Winning photos will be featured on the cover of Ruralite for one issue in 2010 and will also be featured on www.cvea.org. Winners will receive $75 per winning photo.
Revisit your September issue of Ruralite Magazine for detailed photo contest information and rules or visit www.cvea.org. If you have any questions, please contact Sharon Crisp at 822-5506 or 835-7005.
September 2009
Jay Johnson Retires from CVEA After 30 Years of Service
CVEA employees from the Copper Basin and Valdez districts gathered to say goodbye to a long-time friend and CVEA employee. Glennallen Plant Operator, Jay Johnson, retired September 13, 2009 after over 30 years with the company.
Jay grew up in the area and graduated from what was then Glen High in 1971. In 1978, Jay was hired to work in the Glennallen Diesel Plant and has been working hard to keep the lights on ever since. Jay says he’s remained at CVEA because he thinks the job is fun and he truly enjoys the people he works with. “Things are always changing. We never run out of things to do and we’re always learning. I will miss the job, the people, and the area, but we’ll be back.”
Jay and his wife Laurie plan to spend the next several months travelling, and visiting family and friends. Ultimately, they’d like to spend their time working at youth bible camps.
August 2009
Recent CVEA Power Outages
Several recent outages have left members of Copper Valley Electric Association (CVEA) without power for short periods on August 8, August 19, and August 21. Each of the three major system outages were caused by birds contacting energized equipment in the Solomon Gulch Substation. When birds, animals and other objects come into contact with energized equipment, system protective devices detect a fault and act to shut down the system to prevent damage to electrical equipment.
While outages in substations caused by birds or small animals are not unheard of they are far more common on the distribution system. Three substation outages in a two week period of time is very unusual and bird caused outages at the Solomon Gulch substation is very rare.
According to spokesperson Sharon Crisp the second event seemed like a very unusual coincidence but the third event demanded a very close inspection of the substation to determine if there existed a food source or some other reason to explain the bird’s attraction to the location. No obvious explanation was found.
CVEA is evaluating the recent events to determine what mitigation measures might be in order to prevent recurrence of these outages.
If you have questions concerning this news release or other CVEA business, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
July 2009
Steve Bushong, CVEA COO Retured
Steve Bushong, CVEA Chief Operating Officer retired July 1, 2009 after a 35 year career in the electric utility industry. Steve began his career in Virginia in 1974 while still in college and has worked full time for electric cooperatives since 1978. Steve enjoyed working for cooperatives because he believes they represent a true opportunity for service.
As Chief Operating Officer for CVEA, Steve performed management responsibilities for all aspects of engineering, power generation and system operations since joining CVEA in January 2002. According to CEO, Robert Wilkinson, “Steve’s extensive industry knowledge and experience in the electric utility industry has benefitted CVEA in countless ways and his contributions will be sorely missed.”
For now, Steve and wife Denni will continue to reside in Valdez.
April 2009
Copper Valley Electric Annual Meeting Highlights
Approximately 400 people attended the 2009 CVEA Annual Meeting of members held in Glennallen on April 14 and Valdez on April 16.
Members were given up-to-date information on issues that are affecting their Cooperative. CEO Robert Wilkinson gave an update on the Allison Lake hydroelectric project and discussed the acquisition of the Solomon Gulch Hydro Plant.
The message also discussed the cost of power, effects of the Petro Star fire, climate change, conservation, and Legislative issues.
In addition to reports, CVEA members were encouraged to ask questions about issues that were important to them and Mr. Wilkinson and Board members were on hand to respond.
Other highlights included the announcement of the Board of Director election results, the introduction of the 2009 scholarship award recipients, and information on the new CVEA Community Foundation.
Congratulations to Travis Million who was re-elected to serve on the Board in the Copper Basin district and to John Bradshaw who was elected and Lyle Von Bargen who was re-elected to serve in the Valdez district.
Katya Rempel, Dillon Sondergaard, Scott Yahr Jr., Adrina Knutson, Gerald Mills, Chantelle Davey, Ashley Hicks, and Keaton Shepherd were all awarded scholarships in the Copper Basin district. Valdez award recipients included Britni Ezell, Sarah Gussesrt, Annaliese Hazlett, Genevieve Murphy, Lindsey Roberts, Alexandra Wegner, Marche Bender, and Quinn Verfaillie.
CVEA thanked the member volunteers who served on this year’s Credentials and Election Committee and Scholarship Committee.
Several CVEA employees were recognized for their years of service to the Cooperative. In the Copper Basin, Mike Leeper was recognized for 20 years of service, Walter ‘Pinky’ Becker for 15 years, Andy Hess and Bill Caynor for 10 years, and Ryan Cook was recognized for 5 years. In Valdez, John Hunter was recognized for an amazing 35 years of service, Darrell Banner was recognized for ten years and Todd Stahley for 5 years.
Every person in attendance was given a goody bag including a free gift and information on how they can participate in the CVEA Community Foundation.
Members enjoyed grilled burgers and received a ticket making them eligible for door prizes, one of the favorite parts of the annual meeting each year. This year a whopping 68 prizes were given to members in each district.
Prizes included household items, gift certificates, electronics and $2,575 in cash! The $1,000 grand prize was won by Shondra Gene in the Copper Basin and Dave Dengel in Valdez.
CVEA would like to congratulate the winners and thank everyone who took the time to attend the meeting.
February 2009
CVEA Addresses Impacts from the Results of the Petro Star Fire
Since the event in December, CVEA has continued to monitor the financial impacts the Petro Star Refinery fire has had on the cooperative. At their regular board meeting held February 19, the CVEA Board of Directors took further actions to address these impacts while attempting to minimize the impact on the member.
The Board voted unanimously to lower the Fuel and Purchased Power Charge (FPPC) on members February bills to 13.10¢ per kWh. This is a reduction from the 15.64¢ per kWh charged in January.
Residential members will also continue to receive the benefit of the Residential Fuel Cost Assistance Credit (RFCAC). While it was anticipated the program would end in February, the Board voted to continue the program, at a reduced rate, through March. Residential members will see a 6.57¢ per kWh credit on their February bill and a 2.57¢ per kWh credit on their March bill. This action is intended to help members transition through the unexpected earlier termination of the program which, before we lost the Cogen, was expected to continue through May.
Finally the Board scheduled member meetings to continue with planned changes to tariff schedule CV4 announced last month. The meeting in the Copper Basin district will be held Tuesday, March 17, 2009 at 5:30 pm and in the Valdez district on Wednesday, March 18, 2009 at 5:30 pm. The meetings will be held in the respective business offices of CVEA.
Revisions to CV4, CVEA’s Fuel and Purchased Power Tariff, will accomplish several objectives:
(1) Changes to reflect the transition to CVEA ownership of the Solomon Gulch Hydroelectric Power Project: Currently, CVEA collects the cost of purchasing Solomon Gulch power from the Four Dam Pool in the FPPC. After CVEA purchases the Solomon Gulch project from the Four Dam Pool, CVEA will no longer purchase power from the Four Dam Pool, but CVEA’s costs associated with Solomon Gulch will be recovered through the FPPC. The proposed revisions clarify this.
(2) Temporary adjustments: The proposed revisions allow the Board of Directors to make temporary adjustments to the FPPC when and to the extent that significant unforeseen events warrant doing so to avoid significant financial harm to CVEA. As proposed, the Board of Directors’ power to implement such an adjustment would be limited in amount and duration to that which is necessary to address the harm projected. Allowing this type of limited, temporary adjustment will enable the Board of Directors to promptly address unforeseen events such as, the Petro Star Refinery Fire, as necessary without implementing permanent rate increases to electric base rates.
(3) Housekeeping changes: The proposed revisions change the name of the “FPPC” to “Cost of Power”, delete internal references to sections that no longer exist, and renumber sections.
The CVEA Board of Directors will continue to monitor the situation and will communicate necessary changes to the membership.
January 2009
CVEA Takes Action in Response to Petro Star Fire
The CVEA Board of Directors held a work session on January 14 to discuss the operational and financial impacts the Petro Star Valdez Refinery fire has had on the electric cooperative.
Although there was no apparent damage to the CVEA Cogeneration Project as a result of the fire, the project is expected to be offline until the refinery resumes operations. Until that time, power requirements will be provided from a combination of Solomon Gulch and the Glennallen and Valdez Diesel Plants. Petro Star is the fuel supplier for the diesel plants and has committed to fulfill CVEA’s fuel requirements under the revised generation plan. The revised plan will be in effect until Petro Star resumes operations or commencement of the summer generating season when Solomon Gulch is able to carry the majority of the system load, whichever is earlier.
The financial impacts resulting from the fire are significant, the largest of which is the loss of heat revenues from the Cogeneration Project. As part of the contractual arrangement between Petro Star and CVEA, the Co-op purchases fuel for the turbine from the refinery and Petro Star in turn purchases the exhaust gas from the turbine for use in the process of refining oil. With the refinery shut down and the Cogeneration Project out of service, heat revenues from the project are not available. The loss of heat revenues has a significant adverse impact on CVEA’s finances. In a typical year, heat revenues pay some costs of operations, help hold the line on base rates, and more recently are the funding source for the fuel cost credit for residential customers.
While CVEA does not know when the refinery will resume operations, it seems unlikely that it will occur prior to the end of this winter generating season which will end when the Solomon Lake begins to fill and the hydro can take the majority of the system load. This event normally occurs in May. The loss of heat revenue from the date of the fire through the end of the winter season is projected to be $1,400,000. In response to this circumstance CVEA has placed a moratorium on unnecessary operating and capital expenditures and, in addition, has identified opportunities to defer maintenance where possible.
As a result of the work session the Board took the following additional actions.
First, the Board elected to continue the December FPPC (Fuel and Purchased Power Charge) rate of 15.64¢ for the January billing.
Second, The Board voted to continue the Residential Fuel Credit Program at 10.57¢ for January billings. This program is funded by heat revenues and the Board recognizes it may not be possible to continue this program beyond January but felt it was important to offer it at least through the January billing.
Third, the Board approved creation of a margin stabilization program whereby 2008 margins would be deferred to 2009 to offset, in part, the loss of heat revenues. This program is expected to provide approximately $800,000 to address the budget shortfall.
Finally the Board approved moving forward with recommending revisions to CVEA’s Fuel and Purchased Power Tariff to accomplish several objectives. The most significant proposed revision is to grant the Board the authority to include in the FPPC calculation, a provision to temporarily collect additional revenues to address emergency conditions, such as what the Co-op has experienced as a result of the refinery fire. The existing Tariff does not provide the necessary authority for the Board to address this type of emergency. It has not yet been determined what amount might be necessary to fill the 2009 Budget shortfall caused by the loss of heat revenues. In addition, the revised Tariff will change the name of the ‘FPPC’ to ‘Cost of Power’ and add a provision for collecting hydroelectric costs which will become necessary following the purchase of the Solomon Gulch power plant from the Four Dam Pool Power Agency.
CVEA will hold public meetings to discuss the proposed changes to the FPPC Tariff. Dates and times for these meetings are not yet scheduled. Once those meetings are scheduled appropriate notice will be given to the membership.
The CVEA Board of Directors will continue to monitor the situation and anticipates additional actions will be necessary in the coming months to address impacts from the results of the fire.
If you have any questions regarding this or any CVEA issue, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
October 2008
CVEA to Acquire Solomon Gulch from Four Dam Pool Power Agency
Valdez and Glennallen – The Four Dam Pool Power Agency (FDPPA), owner of four Alaska hydroelectric facilities, is finalizing the sale of the two projects that serve cooperative members of the Agency.
Solomon Gulch which serves the Copper Basin and Valdez, and Terror Lake which serves Kodiak Island, will be sold to Copper Valley Electric Association and Kodiak Electric Association, respectively. The FDPPA will retain ownership of the Swan Lake facility which serves Ketchikan, and the Tyee Lake facility which serves the cities of Wrangell and Petersburg. The surviving Agency will be renamed the Southeast Alaska Power Agency.
The transaction is expected to close in early 2009.
The Four Dam Pool Initial Project has been in existence since the early 1980s, when the state of Alaska constructed or acquired the four hydroelectric facilities. The Alaska Legislature provided that the four projects would be treated as one project that would be operated and managed jointly and that would share risks and charge an equal wholesale power rate to each of the five member utilities. This arrangement was memorialized in a 45-year Long Term Power Sales Agreement (PSA) signed in October 1985.
In 2000, following many years of discussions between the utilities and the state regarding purchasing the assets, the Alaska Legislature passed legislation authorizing the formation of joint action agencies, a new entity under Alaska law specifically designed to enable the utilities to purchase the Four Dam Pool assets from the state. Following enactment of the law substantial due diligence was performed in support of the transaction. During this period Kodiak announced their strong desire to own Terror Lake and the utilities passed a resolution stating their intent to pursue breaking up the pool no later than 2012.
In 2002, the state-owned assets were sold to the Four Dam Pool Power Agency. The 1985 PSA which set forth provisions for risk sharing, pooling of costs and charging postage stamp wholesale power rates for all members remained in effect under FDPPA ownership.
In 2006, Kodiak proposed once again to break up the pool and offered to purchase the Terror Lake project for $38 million. These additional resources combined with those of the Four Dam Pool resulted in negotiations which lead to approval by the FDPPA Board of Directors and the respective Boards of Copper Valley and Kodiak to a Purchase and Sale Agreement, whereby CVEA would purchase Solomon Gulch and Kodiak Electric would purchase Terror Lake.
Under the terms of the agreement CVEA will become the owner of the 12‑megawatt Solomon Gulch hydroelectric facility and the 106 miles of transmission line connecting the communities of Valdez and Glennallen. As part of the transaction CVEA will no longer purchase power from the FDPPA but instead will roll the costs of operating and maintaining Solomon Gulch and the transmission system into its rate structure. In addition, costs previously included in the FDPPA rate will now be paid directly by CVEA such as the cost of project management, insurance, regulatory and environmental compliance, renewals and replacements, and administrative costs. Also, as part of the transaction, CVEA will assume all ownership risks pertaining to mechanical, electrical, structural and technological obsolescence, regulatory changes, and natural events including avalanches. In exchange for assuming the risks and burdens of owning the Solomon Gulch Project, CVEA, will receive at closing, $15 million to be placed in reserve to fund these future risks of ownership and needed system improvements.
Notwithstanding the future ownership responsibilities the Management and Board of CVEA are confident that the transaction will result in future economic benefits to CVEA consumers.
Even though the FDPPA organization is composed of tax exempt cooperatives and nontaxable municipal utilities the transaction presented some formidable tax obstacles. “We have had questions about the tax impact of owning Solomon Gulch since the 1999 discussions leading up to the FDPPA purchase of the projects,” said Robert Wilkinson, “and those questions have only recently been answered.”
Under the Internal Revenue Code municipal electric utilities are treated as “government” entities, while electric cooperatives are treated like private entities. Under the Code public assets may not be transferred to private ownership at below fair market value. To do otherwise could result in CVEA receiving taxable income for the value of the cash received and the value of the facilities received.
To address this issue CVEA sought and obtained, from the Internal Revenue Service, a Private Letter Ruling which said that the value of the cash and assets received could be deducted from income as long as that value was accounted for as patronage sourced income. To comply with the private letter ruling, the co-op will have to include both the cash and fair market value of the Solomon Gulch assets as part of its taxable income received in the year of transaction, but may allocate that value to members as non refundable patronage capital and take a tax return deduction in an equal amount. This accounting and tax treatment avoids paying income taxes on the receipt of cash and the plant itself.
The transaction does have other tax consequences. CVEA is tax exempt under Section 501 c (12) of the Internal Revenue Code which says that as long as CVEA receives more than 85% of its revenue from its members it remains tax exempt. In 2009 the purchase of Solomon Gulch will cause CVEA to fail this test and to lose its tax exempt status because the value of the compensation received is considered by the IRS to be nonmember income. While the value of the assets and cash can be deducted from taxable income, interest income cannot, and accordingly CVEA will pay some income tax on investment earnings in 2009.
“Individual utility ownership of the projects has been discussed since at least 1995,” says Wilkinson. “The projects were built for the benefit of the communities they serve and it always made sense to return ownership to those communities.”
With Kodiak’s financing in place and Copper Valley’s tax issues addressed, it now appears that the cooperatives are positioned to take ownership of their respective projects. The cities of Ketchikan, Wrangell, and Petersburg must now seek approval from their governing bodies and many other details must be accomplished before the transaction closes, hopefully in early 2009.
October 2008
CVEA to Leave More Money in Member’s Pockets
At their regular board meeting held October 16 the CVEA Board of Directors voted unanimously to use $350,000 in reserves to lower the FPPC rate for October bills. This action was deemed necessary to avoid the dramatic increase from 8.7¢/kWh for September bills to a projected 17.24¢ /kWh for October bills. The result of this action is the revised FPPC rate that members can expect to see on their October bill will be 12¢ per kWh.
The FPPC rate is expected to increase over the next several months as fossil fuel generation becomes a larger percentage of CVEA’s total monthly generation requirement. Based on current fuel prices, the FPPC for November billings is presently estimated to be 19¢/kWh.
The Board also approved $1.2 million to fund the Residential Fuel Cost Assistance program (RFCAC). The RFCAC was created to help residential members deal with the high cost of winter power bills. The RFCAC will appear on residential bills beginning in November and will continue through May 2009. The credit is expected to be in the range of 10¢/kWh.
If you have any questions regarding this news release or other CVEA business, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
October 2008
FPPC PORTION OF POWER BILL TO RISE SHARPLY
The Fuel and Purchased Power portion of the electric bill is expected to rise sharply for October billings. The FPPC is the cost of fuel used and power purchased from the Four Dam Pool Power Agency to generate a kWh of electrical energy. The FPPC is not marked up. It is passed on directly to consumers as a line item on the monthly bill.
Beginning this summer CVEA adopted a cost causer/cost payer methodology for calculating the FPPC which says if the co-op generates primarily with hydro the FPPC will reflect the cost of hydro and alternatively if generation comes from fuel the FPPC will reflect a higher fuel component. Under this plan, CVEA calculates the FPPC each month using the most current cost and generation information available. Recent bills have meant lower FPPC rates during the summer months when CVEA is operating at close to 100% hydro. Conversely, as winter approaches higher FPPC rates are expected as the Co-op generates more of its generation requirement from fossil fuels.
Recent colder temperatures at elevation and corresponding reduced flows into Solomon Lake have required that CVEA switch to the winter generation program several weeks earlier than expected. This change will increase the fossil fuel generation included in the FPPC calculation for October bills. The FPPC rate for October billings is expected to be 17.24¢/kWh.
The FPPC rate is expected to increase over the next several months as fossil fuel generation becomes a larger percent of the total monthly generation requirement. Based on current fuel prices, the FPPC for November billings is estimated to be roughly 23¢/kWh.
In August the CVEA Board of Directors approved a new program designed to help residential members deal with the high cost of winter power bills. The new program called the Residential Fuel Cost Assistance Credit will appear on residential power bills beginning in November and is expected to last through May 2009. The credit is expected to be in the range of 10¢/kWh.
If you have any questions regarding this news release or other CVEA business, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
August 2008
CVEA Board Approves Residential Fuel Cost Assistance Credit for Residential Bills
The CVEA Board of Directors unanimously approved the Residential Fuel Cost Assistance Credit (RFCAC) during their regular Board meeting on Thursday, August 21, 2008. The RFCAC will be funded using cogen heat revenue and will reduce residential members’ power bills during the winter months. Residential members’ will see the benefit of approximately 10.57¢ per kWh credit on their monthly bills November 2008 through May 2009. The exact amount will be announced in November.
The idea for the RFCAC came from CVEA CEO, Robert Wilkinson, this past Spring after hearing a story of a member needing to choose between paying their CVEA bill or their fuel bill. CVEA thought it was important to find a mechanism to help the residential member who can’t control the high cost of energy or pass the costs onto anyone else.
The impact to residential members will be substantial. Members having an average monthly usage of 500 kWh will see an estimated $52.85 reduction on their monthly power bill. This will add up to over $300 through the course of the winter.
The CVEA Board believes the RFCAC is a positive attempt to help the membership and the community deal with high energy costs. It will help residential members through the winter when fuel costs passed on to the members are at their highest.
If you have any questions regarding this or any CVEA issue, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
August 2008
CVEA Updates FPPC & Offers Residential Fuel Cost Assistance Credit This Winter
In an effort to better serve CVEA members, the Cooperative is changing the way they bill members for the Fuel and Purchased Power Cost (FPPC). The FPPC is the cost of fuel used and power purchased from the Four Dam Pool Power Agency to generate a kWh of electrical energy. The FPPC is not marked up. It is passed on directly to consumers as a line item on the monthly bill. Recently, CVEA has attempted to levelize the FPPC throughout the year in an effort to reduce seasonal cost impacts during the winter months. With escalating fuel prices, changes in generation, and declining sales, CVEA realizes that the current method isn’t working.
The CVEA Board of Directors has approved a plan to bill the FPPC monthly, using a cost user/cost payer approach. Under this plan, CVEA will calculate the FPPC each month using the most current cost and generation information. For members, this will mean low monthly FPPC rates during the summer months when we are operating close to 100% hydro power and higher FPPC rates in winter when we are using mostly fossil fuel for generation. CVEA is strongly encouraging members to plan accordingly.
The monthly rate will be established by the 10th of each month and will be accessible to members on www.cvea.org or by calling either CVEA office.
The new FPPC billing plan took effect on the July 2008 bill. Members saw the FPPC drop to 7.25¢ per kWh. To get advanced notice of the August rate, check out cvea.org or give one of the offices a call after August 10, 2008.
CVEA has a commitment to providing power to members at the lowest possible cost. In honoring this commitment, CVEA is doing everything they can to control high costs. In the fall of 2008, CVEA plans to roll out a Residential Fuel Cost Assistance Credit (RFCAC) to help residential consumers deal with the high cost of power when we are generating with fossil fuel. The credit will use cogen heat revenue to reduce residential consumers’ power bills during the winter months. Residential members will see the benefit of an estimated 10.57¢ per kWh credit on their monthly bills November 2008 through May 2009.
Public meetings have been scheduled to receive member input on these changes. The hearings are scheduled as follows:
Valdez Valdez Civic Center Tuesday, August 19, 2008 7:00 pm
Copper Basin American Legion Hall Wednesday, August 20, 2008 7:00 pm
If you have any questions regarding this or any CVEA issue, please contact Sharon Crisp at 835-7005, 822-5506 or email crisp@cvea.org.
July 2008
Notice of CVEA Tariff Addition
July 21, 2008
Copper Valley Electric Association’s Board of Directors gives notice to its members of intent to add a new tariff sheet for a residential fuel cost assistance credit (RFCAC). The purpose of the credit is to help offset fuel costs for residential members in the winter months when CVEA is generating with fossil fuel.
Discussion
The RFCAC will be available to all CVEA residential consumers billed under the CB1 and V1 residential service rate schedules and will be applied to residential bills in the months of November through May. The RFCAC will be calculated by dividing the total credit amount in dollars by the total residential kWh sales for the winter season. The total credit amount will be determined by the CVEA Board of Directors annually by November 1. The credit for this upcoming winter is estimated to be 10.57¢ per kWh.
Detailed information on this filing may be obtained from Jaime Matthews, Manager of Administration & Finance, CVEA, PO Box 45, Glennallen, AK 99588, phone: (907) 822-3211, (907) 835-4301 or by email at Matthews@cvea.org .
Any interested CVEA member may provide comments on the proposed tariff sheet to the Board of Directors either by hard copy or email. Comments must be received by 5pm Friday, August 22, 2008, in the CVEA Glennallen office. Public hearings have been scheduled to receive member input on the proposed changes. The hearings are scheduled as follows:
Tuesday, August 19, 2008 7pm Valdez Civic Center
Wednesday, August 20, 2008 7pm American Legion
July 2008
FPPC Lowered on July Bill
Please note that the FPPC rate has been lowered to 7.25 cents per kWh on your July bill. This rate is based on actual costs for June. The new rate for August will be available August 10. Call or visit the website for updates.
April 2008
2008 Copper Valley Electric Annual Meeting Highlights
CVEA experienced near record turnouts, with over 400 people attending the 2008 Annual Meeting of members held in Valdez on April 15 and Glennallen on April 17.
Members were given up-to-date information on issues that are affecting their Cooperative. CEO Robert Wilkinson discussed the Allison Lake hydroelectric project outlining the next steps, the timeline for completion, and the benefits it promises to bring CVEA members.
The message also outlined current Legislative issues, including HB152, the Renewable Energy Bill, and other issues of interest that are affecting the electric industry.
Also discussed was the ongoing rate study. As the work on the rate study progresses, the Board’s goals are to ensure that the Cooperative maintains sound financial health while minimizing the impact to customers. Members heard a new plan for billing the Fuel and Purchased Power Costs (FPPC) as they are incurred and a program to help residential customers deal with the high cost of power.
The Residential Fuel Credit, proposed to begin in the fall of 2008, will use cogen heat revenue to credit against residential consumers’ power bills during the winter. The amount is unknown as of yet, but is conservatively estimated to be 5-6 cents per kWh.
In addition to reports, CVEA members were encouraged to ask questions about issues that were important to them and Mr. Wilkinson was on hand to respond. CVEA members in both districts had lengthy question and answer sessions.
Other highlights included the announcement of the Board of Director election results, the introduction
of the 2008 scholarship award recipients, and the launch of the newly updated cvea.org.
Every person in attendance was given a goody bag containing energy efficient gifts and information intended to encourage members to take a hard look at conservation. These items helped carry an
overriding message of the meeting, that one way members can control their power costs is to control their energy usage.
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| Copper River Beater - Elbert Thompson |
Valdez Beater - Marilyn Bell |
Members also received a ticket making them eligible for door prizes, one of the favorite parts of the annual meeting each year. This year a whopping 67 prizes were given to members in each district.
Prizes included household items, gift certificates, electronics and $1,525 in cash! The grand prize was a CVEA beater! Marlynn Bell won the Ford F250 4X4 in the Valdez district, and Elbert Thompson won a Ford Explorer in the Copper Basin District.
CVEA would like to congratulate the winners and thank everyone who took the time to attend the meeting.
March 2008
Copper Valley Electric Files for Preliminary Permit on Allison Lake
On March 3, CVEA filed an application for a preliminary permit with the Federal Energy Regulatory Commission (FERC) to undertake an Allison Lake Hydroelectric Project. For CVEA the project holds the potential for increased hydro power generation which could displace over 20,000 MWH of fossil fuel generation and provide members of the Cooperative long-term, sustainable, environmentally clean energy.
Allison Lake has been studied as a potential source of hydroelectric power since the 1980s. The Allison Lake drainage, which sits west of the Solomon Gulch hydroelectric project, has long been seen as a promising location for hydro power development. Since 2004, soaring oil prices have dramatically raised the cost of electricity in Valdez and the Copper River Valley which has led CVEA to look at potential alternatives for power generation. In 2006, CVEA prepared a reconnaissance level study of power supply alternatives. This study, titled the Alternative Generation Review , evaluated the potential for geothermal, fuel cells, solar, wind, coal, and hydro via Allison or Silver Lake. The study recommended Allison Lake be further evaluated.
In 2007, CVEA completed a pre-feasibility study of Allison Lake alternatives. As part of the study, previous reports prepared by the Army Corps of Engineers and HDR Engineers were reviewed and a field reconnaissance site visit was conducted. The pre-feasibility study identifies three potential alternatives for using Allison Lake water to generate electricity. The alternatives include a tunnel option to divert Allison water to Solomon Gulch and two standalone options to move Allison water to a new power house near tidewater.
The conclusions of the study indicate that each of the three alternatives appears to be technically feasible and each appears to deliver power to CVEA at less than the current cost of fossil fuel generation, assuming the project is commercially financed. Grants or other attractive financing products would enhance the economics of each of the three alternatives. The recommendation of the study was to proceed with the initial steps toward licensing a hydropower project at Allison Lake.
CVEA's application to FERC for the preliminary permit immediately follows the expiration of the permit recently held by Green Power Development, which expired on February 29, 2008. The purpose of a preliminary permit is to secure and maintain priority to allow CVEA to study the power potential of Allison Lake and to develop information necessary to support a license application. The term of the requested permit is three years. During this time, CVEA will study the potential regulatory and environmental considerations associated with developments of this type.
Jim Manning, Board President, said the Board of Directors has been working toward this announcement since early 2007 and that the Board looks forward to discussing the potential Allison Lake has for the Cooperative's membership.
The application for the preliminary permit is available for inspection and reproduction during regular business hours at both CVEA offices and at the public libraries in Valdez and Glennallen.
For more information concerning this news release or other CVEA business, please contact Sharon Crisp, Director of Communications at 835-7005 or crisp@cvea.org.
November 2007
45¢ Per Gallon Increase in Diesel Fuel Costs Cause CVEA to Raise FPPC Again
Since the CVEA Board approved a 14.7¢ Fuel & Purchased Power Cost in October, the cost of diesel fuel purchased by CVEA has increased by 45¢ per gallon. This increase was considered by the Board to be significant and warranted another review of the Fuel & Purchased Power cost. As a result of the review, the Board determined that in order to recover fuel costs, it is necessary to increase the FPPC again in spite of their desire to hold the line until March of 2008.
CVEA members will see an increase in the FPPC on their November bill. The FPPC will increase to 17.12¢ per kWh.
CVEA has a commitment to providing power to members at the lowest possible cost. In honoring this commitment, CVEA is doing everything they can to control high costs. Since 2000, specific efforts to help offset the impact to the member include $2,500,000 in capital credit refunds and holding back $4,000,000 in fuel cost instead of increasing the FPPC even higher.
One thing CVEA cannot do, however, is control the high price of fuel. “The future forecast for the cost of a barrel of oil does not look good,” according to CVEA CEO Robert Wilkinson. “It is important for consumers to understand that as the price of oil continues to climb, the FPPC will continue to increase. It is important that our members are prepared for that reality.”
With rising fuel costs impacting everyone's budget, CVEA would like to encourage members to take another look at their electric needs this winter. There are many things consumers can do that have little effect on their day to day lives that will reduce the amount of kWhs used each month and lower electric bills. Visit energy tips for conservation tips.
For those with serious concerns regarding their ability to pay for their heating needs this winter, the State of Alaska, Division of Health and Social Services offers a heating assistance program to low income households. This program assists qualified individuals with home heating expenses. Eligibility is based on income. For more information, contact Alaska's Public Assistance office at 1-800-470-3058, visit the State of Alaska's website at http://www.hss.state.ak.us/dpa/programs/hap or stop by either CVEA office for an application.
CVEA recognizes that the cost of fuel is a problem and the problem is much bigger than CVEA. The cost of fuel is affecting every person in the CVEA service territory. If you are concerned about the cost of fuel, whether that relates to electricity, heating fuel, or gasoline, we encourage you to contact your elected representatives and let them know that we need their help.
For more information regarding this topic or any other CVEA issue, please contact Sharon Crisp at 835-7005, 822-3211, or email crisp@cvea.org.
October 2007
CVEA Board Authorizes Use of Margins to Help Keep Costs Down
CVEA members will see an increase in the Fuel and Purchased Power Cost (FPPC) on their October bill. The FPPC will increase to 14.72 ¢ per kWh.
The FPPC increase was approved after review by the Board of Directors at their regular board meeting on October 18, 2007. Many factors affected this decision including the increasing cost of fuel and less than anticipated water available at Solomon Gulch for power generation.
During the review, one scenario estimated the necessary FPPC rate to be as high as 18.58 ¢ per kWh. In an effort to keep costs down, the Board authorized an expenditure of $1.5 million in 2007 margins, mostly resulting from heat sales, to offset the higher costs and allow for a smaller increase. Unless CVEA sees a dramatic increase in fuel costs, the Board has approved the rate to remain at 14.72 ¢ through the March 2008 billing. This will help offset seasonal cost impacts to members through the winter months.
If you have questions or comments about this news release or other business of the cooperative please contact Sharon Crisp at (907) 835-7005 or by email at crisp@cvea.org.
August 2007
2007 APA Annual Meeting Comes to Valdez, September 12-14!
Valdez will be bursting with energy September 12-14 as approximately 150 delegates from the Alaska Power Association (APA) converge to discuss issues of importance to Alaska electric consumers.
The annual meeting of the trade association provides leaders from Alaska's electric cooperatives, investor-owned power companies and municipal utilities the opportunity to discuss issues faced by the industry, as well as recognize individuals whose accomplishments have benefited rural electrification efforts in Alaska. The theme for this year's event is ‘Energy Independence for Alaska' and the focus will be on statewide energy policy development.
In addition to attending meetings and general sessions, APA Annual Meeting attendees are able to spend time shopping, touring CVEA plant facilities and enjoying a reception and cruise aboard Stan Stephens Cruises. APA estimates its annual meeting will have a significant economic impact on the community. A conservative estimate that accounts for all costs including catering, hotel rooms, transportation, tours, entertainment, and miscellaneous expenses is roughly $85,000, according to APA.
Copper Valley Electric Association (CVEA) looks forward to hosting the 2007 APA Annual Meeting and is excited to have the opportunity to showcase CVEA and show the rest of the state of Alaska why Valdez is such a great place to live, work, and visit.
If you have any questions regarding the Alaska Power Association Annual Meeting, please contact Sharon Crisp at 835-4301 in Valdez or 822-3211 in the Copper Basin.
July 2007
FUEL & PURCHASED POWER COST (FPPC) UPDATE!!
In an effort to better match the seasonal cost impacts of power generation resources in summer and winter the CVEA Board of Directors adopted a strategy to calculate the Fuel and Purchased Power charge semi-annually. As communicated in the July issue of Ruralite, this strategy is proving more difficult in 2007.
Typically during the summer months, Solomon Gulch hydro generates nearly 100% of the power generation requirement. This summer, water availability for power generation has been greatly reduced. Currently, the Solomon Lake reservoir is only 56% of the seventeen year average of usable water. To account for low water levels and in an effort to increase the reservoir level before winter CVEA will turn on the cogeneration and diesel plants in early August.
This situation was reviewed by the Board of Directors at their regular monthly board meeting on July 19, 2007. In view of the lack of water for summer power generation the Board approved a modest decrease in the FPPC from 12.49¢ to 11.47¢ per kWh. This change is reflected on July bills and is expected to remain in effect through the September billing. The Board of Directors plans to re-visit this subject at the October board meeting.
If you have additional questions or comments please contact: Sharon Crisp at (907) 835-7005 or by email at crisp@cvea.org .
June 2007
CVEA, FERC and several community stakeholders review Solomon Gulch Emergency Action Plan!
On Thursday, June 14, 2007 representatives from the Four Dam Pool Power Association, (FDPPA) owner of the Solomon Gulch Hydro Facility, the Federal Energy Regulatory Commission (FERC), Coast Guard, National Weather Service, Department of Transportation, Valdez Fisheries Development Association, Alyeska Pipeline Service Company, Providence Valdez Medical Center, and the Valdez Police Department met with Copper Valley Electric Association (CVEA) to participate in an Emergency Action Plan (EAP) review for the Solomon Gulch Hydroelectric facility.
The exercise is required by FERC and the purpose is to review, test, and update the Emergency Action Plan that would be utilized for emergencies resulting in potentially hazardous situations or imminent failure of the Solomon Gulch Dam.
This year's review included discussion of the October 2006 flood that occurred in Valdez. After reviewing the flood event, it was determined that the EAP did not have a communication process in place for a non-failure emergency condition and that such an action plan needs to be developed. This would ensure all EAP participants are aware of severe conditions that need to be closely monitored. In addition to the discussion on flood and high water levels, participants engaged in a table top drill. During the drill, an emergency situation was presented to the group and alternatives for working through the situation were discussed.
According to Steve Bushong, CVEA Chief Operating Officer, “This year's exercise was a good one, very productive, and I was pleased to see all of the critical representatives at the table.” Having the right people at the table is very important as everyone would or could be involved if an emergency situation existed. In addition, input from participating representatives can be used to help the FDPPA make changes to the existing EAP.
The Solomon Gulch EAP is a critical component of CVEA's emergency response plan aimed at supporting our efforts to provide exceptional service through safe and reliable programs.
December 2006
$1.2 Million Capital Credit Retirement in December!
One of the benefits of belonging to a cooperative is receiving a portion of the margins in the form of capital credits. At the November Board meeting, the Copper Valley Electric Association Board of Directors voted to retire (refund) ten percent of the Association's patronage capital. The disbursement, which will be made by mid-December, will total $1.2 million. The last general retirement of capital credits was made by CVEA in December 2004.
Refunds will be calculated based on the percentage of patronage capital method. This method of calculation multiplies the percent of total cooperative patronage capital to be retired, in this case ten percent, by the individual member's capital credit balance regardless of when they joined CVEA. Checks and billing credits will be sent to over 2,300 current members.
Refunds under $50 for active members will be provided in the form of a credit on the electric bill. Refunds over $50 will be provided via check. CVEA intends to distribute checks by the second week of December. Refunds in the form of a billing credit will be reflected on the December monthly bill.
What are capital credits? CVEA is a nonprofit cooperative owned by our members. As provided in our Articles of Incorporation and Bylaws, electricity is provided at cost. In most businesses, receipts for goods or services in excess of operating costs are profits; while at a cooperative payments by members which exceed the cost of furnishing electric service are called margins. Margins are retained by the co-op as working capital in order to maintain and improve the electric system until the Board of Directors declares a refund.
How do they work? Margins are assigned annually to member accounts in proportion to the member's purchase of electric service during the preceding year. Member/owners are notified via mail each year when margins are assigned.
October 2006
Alternative Energy Study
As a follow up to the Strategic Issues Paper, CVEA retained the Financial Engineering Company to provide an independent review of what generation options might provide lower costs to CVEA members. The primary goal of the study was to determine whether the high fuel cost associated with the diesel plants could be displaced with another, less expensive, generation alternative. The resulting report entitled Alternative Generation Review evaluated a number of generation alternatives while taking into account the contractual and seasonal limitations of producing power on CVEA's system.
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