JANUARY 2011

JANUARY 2011
Heart attack survivor Stu Carter
of Sierra Vista rides his bike up
to 5,000 miles a year for the
U.S. Air Force Cycling Team.
© NANCY JORGENSEN
Arizona Statewide
Statewide Electric Co-op Association Visit,
Legislator Appreciation Event Upcoming
Legislators: Mark
your calendars for
February 1 and
make plans for this
year’s annual event
Arizona Gov. Jan Brewer dropped by
last year’s legislative appreciation
dinner to visit with electric cooperative directors and employees. Gene
Robert Larson, right, president of the
Graham County Electric Cooperative
board and vice president of the
Arizona Electric Power Cooperative
board, shared a few moments with
the governor during the event at
Rustlers Rooste.
Photos by Jim Donahue
4
J A N UA R Y 2011 Grand Canyon State Electric
Cooperative Association will
hold its legislative appreciation dinner at Rustlers Rooste
on February 1.
The association—which
represents Arizona’s nine electric cooperatives at the state
legislature—has held a legislative appreciation dinner for
more than 30 years. It is part
of the association’s annual
meeting activities.
Prior to the dinner—
co-hosted by the Arizona
Municipal Power Users
Association—co-op directors
and upper management will
spend the day visiting with
legislators about legislation
important to the cooperatives
and their members.
The cooperative contingent
is broken into teams of four
or five and assigned about an
equal number of legislators
to visit.
“The legislative appreciation dinner is one of the highlights of the day,” says Richard
Lunt, director for Duncan
Valley Electric Cooperative of
Duncan, Arizona. “We spend
the day making sure our
thoughts on potential legislation are known and then in
the evening we spend time
getting to know the legislators.”
Andy Mayberry, director
for Sulphur Springs Valley
Electric Cooperative of
Willcox, explains one of the
Former State Rep. Bill Konopnicki, left, visited with Duncan Valley Electric
Cooperative board President Johnnie Frie during last year’s legislative visits.
benefits of the legislative visits is meeting legislators from
around the state, primarily in
the Phoenix area, who have
no concept of what an electric
cooperative is or does.
“We really get an opportunity to educate these folks
about the cooperative business model and let them
know their votes have impacts
outside of the major metro
areas,” Andy says.
GCSECA board President
Jeff Larson, who also serves on
the board of Graham County
Electric Cooperative of Pima,
says, “The co-op participants for these legislator visits
really look forward to their
time with the elected officials. It is our opportunity to
put a face behind the electric
cooperatives. What a better
source to learn about cooperatives than from the directors who serve on the co-op
boards. Many legislators are
familiar with Arizona Public
Service, Salt River Project and
Tucson Electric, but we find
many urban legislators are
unaware of the cooperatives in
the state. With this year’s large
number of new legislators,
we’ll have a larger than normal
task ahead of us.”
GCSECA CEO Tom Jones
remarks, “The involvement
of our grassroots folks from
the legislator’s home district
gives the legislators a face and
a name of someone who will
have to deal with the impacts
of the legislation under consideration.” n
Where are Arizona’s Co-ops Located?
Electric cooperatives are
located around Arizona.
The earliest electric cooperative to incorporate in
Arizona was Sulphur Springs
Valley Electric Cooperative of
Willcox, which incorporated
in 1938. By 1947, five more
distribution cooperatives were
incorporated.
Later, in 1961, a generation
and transmission cooperative,
AEPCO, was formed to supply most of the distribution
cooperatives with wholesale
power. Since then, two new
cooperatives have formed.
Sierra Southwest Cooperative
Services and Southwest
Transmission Cooperative
both incorporated in 1998.
The distribution cooperatives have defined service
territories. They serve their
members—residential and
commercial—at the retail level.
Cooperatives are governed
by a board of directors. They
are members of the cooperative and elected by their fellow
members. The co-op boards
hire CEOs or general managers, who run the daily operations of the cooperative by
managing a staff.
The cooperatives in the
state have memberships ranging from nearly 1,700 to
nearly 39,000.
The cooperatives are
regulated by the Arizona
Corporation Commission.
Grand Canyon State
Electric Cooperative
Association was formed by
the cooperatives in 1950 with
the primary purpose of giving
Arizona’s electric cooperatives a unifeid voice in state
and national regulatory and
legislative matters. Resourcepooling and cost-sharing by
the member cooperatives
have combined to help make
GCSECA a strong, efficient
statewide organization. n
Electric Cooperatives of Arizona and Southern California
Electric Cooperative
Headquarters
Anza EC
Duncan Valley EC
Graham County EC
Mohave EC
Navopache EC
Sulphur Springs Valley EC
Trico EC
Arizona Electric Power Cooperative
Sierra Southwest Cooperative Services
Southwest Transmission Cooperative
Anza, California
Duncan, Arizona
Pima, Arizona
Bullhead City, Arizona
Lakeside-Pinetop, Arizona
Willcox, Arizona
Marana, Arizona
Benson, Arizona
Benson, Arizona
Benson, Arizona
Number of
Members
3,690
1,682
6,387
32,262
32,754
38,696
38,489
8 utilities
30
8 utilities
Miles
of Line
732
453
1,217
1,509
3,478
4,039
3,561
None
None
619
Meters
per Mile
7
5.13
7.15
26
11.6
13.09
11
NA
NA
NA
Number of
Employees
17
14
43
78
113
197
125
20
254
32
Year
Incorporated
1951
1947
1945
1946
1946
1938
1945
1961
1998
1998
J A N UA R Y 2 0 1 1 5
Power Points
Utility Rates
Electricity Prices Under
Pre$$ure
By Megan McKoy-Noe
Pressure cookers are ideal for heating liquids without reaching a boiling
point. Outside influences are sealed off. As pressure builds, a liquid
withstands higher and higher heat. But if you apply too much
pressure, the liquid explodes, popping a gasket in the process.
Electric cooperatives face a similar situation. Pressures from new
government regulations, rising fuel and materials costs, escalating demand for electricity, and investments in adding generation and
upgrading existing infrastructure have climbed during the past decade.
While the current economic downturn released some steam—such as
causing electric demand to dip—this respite might just mark the “calm
before the storm,” when financial fortunes rebound and pressure builds again.
Let’s lift the lid to explore different pressures on electric bills.
1.
Growing Electric Demand
As the nation’s economy slowed in recent years, electricity sales
dropped 0.8 percent in 2008 and another 4.2 percent in 2009—the
greatest single decline in six decades.
Despite those decreases, the U.S. Department of Energy (DOE) predicts by
2030 residential demand for electricity will increase between 16 percent and
36 percent above 2007 levels.
Historically, electric co-op demand rises faster than the industry average. Before
the recession, co-op sales increased by 4.4 percent,
while industry sales only increased by 2.6 percent between 2006 and 2007.
The U.S. Energy Information
Administration predicts industry
demand will rebound by 5 percent
in 2010 and estimates that with
strong economic growth, electricity
prices will jump 19 percent by 2035.
However, the forecaster fails to factor
in added costs of complying with new
federal regulations aimed at curbing
emissions of greenhouse gases, such as
carbon dioxide, from power plants.
8
J A N UA R Y 2011
2.
Added Regulation
The EPA will begin regulating greenhouse gases, such as
carbon dioxide, this month—
an action made possible by a 2007 U.S.
Supreme Court decision (Massachusetts
v. EPA) that gave the agency a green light
to consider imposing such controls.
In late 2009, EPA declared six greenhouse gases, including carbon dioxide,
“endanger the public health and welfare”
of current and future generations.
Although carbon dioxide legislation
crowds headlines, the cumulative impact
of new federal mandates for handling
coal ash, water and limiting hazardous
air pollutants—along with state and,
perhaps, federal requirements for
renewable energy generation—could
become a much more expensive hurdle.
During the past 20 years, EPA has
used the federal Clean Air Act to slash
Continues on page 26
Power Points
Utility Rates
Electricity Prices
Continues from page 8
nationwide emissions of nitrogen
oxides, which contribute to smog, by 54
percent, and cut acid rain-causing sulfur
dioxide emissions by 42 percent.
However, proven technology existed
to achieve those results—something not
currently available for removing carbon
dioxide and other items under scrutiny.
“The Clean Air Act as written was
never designed to deal with carbon
dioxide, and it could be awkward at best
and probably a disaster, at worst,” warns
Glenn English, CEO of the Arlington,
Va.-based National Rural Electric
Cooperative Association (NRECA).
3.
“We’re entering an era where
regulatory activities are going to play
a more significant role in the electric
industry than what happens on the
legislative front,” says Kirk Johnson,
NRECA vice president of energy and
environmental policy, noting Congress
has debated climate change policy for
more than a decade without reaching a
clear consensus. “Environmental statutes
that have been on the books since the
1970s, especially the Clean Air Act,
are like a one-way ratchet: They only
tighten.”
Tighter emissions standards could
have a multibillion dollar impact on the
cost of doing business for electric co-ops,
adding more pressure to electric bills.
Need for New Power Plants
Even as new regulations are announced, utilities must be ready to
make quick decisions on moving forward with power plants to meet
growing electricity demand—especially since the number of operating plants could start to fall.
“Because of these new rules, we’re expecting a number of current power plants
to go offline and retire,” Johnson predicts. “The cost to comply with the rules
may simply be too much.”
The North American Electric Reliability Corp., which oversees the reliability
of the bulk power system covering the United States and most of Canada,
estimates that by 2017 peak demand for electricity will jump 135,000 megawatts—equivalent to the current amount of power used by the entire western
half of the nation. Planned new generation resources will provide only another
77,000 MW, far short of the energy Americans
will need.
Electric utilities are working hard
to relieve some pressure and delay the
need for new plants through energyefficiency programs. Utilities offer
efficiency education; nearly 50 percent of the nation’s electric cooperatives offer financial incentives for
members to make efficient choices.
But these measures can only go so far.
“When the economy turns around,
co-ops will resume growing faster than
other utilities,” English says. “We’ve got to be
ready for that development and have power plants planned and largely ready to
go. However, co-ops must first know how carbon dioxide and other rules could
impact the price of power to make prudent decisions.”
26
J A N UA R Y 2011
4.
Cost of Materials
Every year that investments
in new power plants are
delayed jacks up the final
price tag. Worldwide, steel prices soared
42 percent between 2009 and 2010, while
costs for other construction supplies, such
as nickel and concrete, increased as well.
Material costs for utilities also are
climbing. Prices for copper, a critical raw
material used for wire and to ground
electrical equipment, reached a 27-month
high in 2010. Between 1990 and 2010 in
the north-central part of America, the price
tag on utility poles, towers and fixtures skyrocketed 98 percent, while line transformers spiked 154 percent.
“Electric co-ops have an obligation
to keep the lights on and electric bills
affordable at a time when the costs for
fuel and raw materials to build new
generation are steadily rising,” English
says. “Combined with costs of additional
regulatory compliance, these are just
some of the pressure points that will
affect electric bills in years to come—all
of which are largely beyond the control
of local electric co-ops.”
Voice for the People
While the energy landscape seems bleak
in terms of keeping the lid on escalating
electricity prices, consumers of public
power have watchdogs for their interests
in NRECA at the federal level and statewide rural electric associations at the
local level.
These associations work to educate
lawmakers on how state and federal
legislation, and new industry regulations,
affect the average consumer’s pocketbook.
NRECA has just launched the national
“Looking Out For You” campaign, which
is committed to keeping consumers
informed about policy changes and
climate legislation—issues at the forefront
of keeping electric rates affordable.
Megan McKoy-Noe writes on consumer and
cooperative affairs for the National Rural Electric
Cooperative Association.
Down the Line
News From Arizona’s G&T Cooperatives
Get Ready: The Co-op Connections Card is Here
Your member benefits card
offers discounts and more
By Geoff Oldfather,
Sierra Southwest Cooperative Services
goldfather@ssw.coop
It’s here. Your electric distribution
cooperative is introducing one of the
most effective nationwide membership
programs there is, designed to save you
money on everything from prescriptions
to hotel rooms to home goods to
restaurant dining—literally thousands of
goods and services.
It won’t cost you a penny. All you
have to do is use it.
It’s the Co-op Connections Card
(www.connections.coop) and if you
are a member of Graham County
Electric Cooperative (GCEC), Duncan
Valley Electric Cooperative (DVEC) or
Mohave Electric Cooperative (MEC),
you probably have already received
your card in the mail, as part of your
electric bill or in a separate mailing. If
not, you will receive it soon, as all three
cooperatives introduce the card this
month.
It’s just one more benefit of
membership in your Touchstone Energy
Cooperative.
One immediate benefit saving
cooperative members like you more
than $1 million a month nationwide
is the pharmacy discount, which
allows you to start saving money on
prescription medicines.
The Co-op Connections Card will
get you discounts of 10 percent to
60 percent on prescriptions at more
than 60,000 pharmacies nationwide,
including CVS, Walgreens, Walmart and
Target.
Two other members of the Arizona’s
G&T Cooperatives family—Trico
Electric Cooperative in Marana and
Anza Electric Cooperative in Anza,
California—already offer the card. If
you don’t have one, there is information
on how to get one in the information
box below.
almost 100 national retailers, including
Walmart, Sears Select, Hertz, Motel 6,
Tire Rack and Advance Auto Parts.
Your Touchstone Energy electric
cooperative is working with local
businesses to bring them in to the
program, as well to provide you with
discounts and incentives that will show
you the value of shopping with your
local merchants and show those local
merchants the value of membership.
Be sure to support all of your
local merchants who join the Co-op
Connections Card program.
Staying Power
While the Co-op Connections Card
program is new to us, it’s not new
everywhere. Since it was introduced
several years ago, more than 300
Touchstone Energy electric cooperatives
across the country have signed up, with
great results.
That is one of the strengths of
the program: It has been around for
almost a decade and it’s here to stay. In
fact, the national Touchstone Energy
organization just signed a new 10-year
contract with the benefits provider that
administers the prescription pharmacy
discount program, so you know the
benefits of the card will be there when
you need them.
Learn More
The easiest way to learn about all of
the advantages of membership and the
Co-op Connections Card is to visit
the website, www.connections.coop,
and browse the offers, incentives and
discounts. A search feature allows you
to enter your zip code and the product
or service you are looking for and it will
give you a list of participating retailers.
The card is free, it doesn’t expire,
there are no charges or fees and any
member of your family can use it.
It almost sounds too good to be true,
but in this case, it’s for real.
It’s just one more way your
Touchstone Energy cooperatives are
partnering with you to make life
better. n
More Than Prescriptions
Remember, the Co-op Connections
Card isn’t just about pharmacy
discounts. It’s accepted and honored by
Ask your local Touchstone Energy cooperative
about this great member benefit!
Anza Electric Cooperative—(951) 763-4333
Duncan Valley Electric Cooperative—(928) 359-2503 or (800) 669-2503
Graham County Electric Cooperative—(928) 485-2451
Mohave Electric Cooperative—(928) 763-1000
Trico Electric Cooperative—(520) 744-2944
28
J A N UA R Y 2 0 1 1 Member Testimonials
More than 325 Touchstone Energy electric
cooperatives are members of the Co-op
Connections Card program. Here are
just a few testimonials from members of
cooperatives around the country who have
used the card:
“One of my prescriptions (generic) costs me
$63 per month. Can you imagine my surprise
and delight when I last refilled it? I used the
Co-op Connections Card for the first time and
that prescription cost me only $23. Even the
pharmacy tech was amazed at the savings. Of
course, I realize that won’t be the case on all
purchases I make, but that savings really made
my day and will certainly help me out in the
future.”—Horry Electric Cooperative, South
Carolina
“Mine and my best friend’s families were
vacationing for a week in Hilton Head this
past week. On our fourth day there, we went
to Shelter Cove to shop and eat. That is when
I noticed the Co-op Connections Card in the
window of the Parrot Cove Grill and Bar.
Frequently Asked Questions
Naturally, we had to eat there and saved about
$4 with our 10% discount! I felt horrible for not
researching other discounts prior to planning our
vacation. So, when we got back to the house, I
looked into your deals and offers. Good thing
I did, because my kids wanted to go kayaking
and I found a great deal. We saved $95 using
my card at Kayak Hilton Head on a guided
tour for three adults and four children. This
is definitely something to write home about
when vacationing!”—Coast Electric Power
Association, Mississippi
“Just received the Connections Card
unsolicited in the mail. I didn’t really care much
about the pharmacy benefit because I don’t take
medication, but I popped it in my wallet anyway.
The next day I went to the doctor and found
that my head cold had turned into something
requiring antibiotics. At the Giant Pharmacy
they asked if I had any discount cards, and I
remembered the Adams Electric card I had
just received and tried it. It worked—you saved
me $31! Wow. Thanks.”—Adams Electric
Cooperative, Pennsylvania
Does everyone in my family need a card?
No. One card may be used by the entire family.
I’ve lost my card. How can I get a
replacement?
Please stop by any member cooperative’s office
or call the number in the information box on
the opposite page for a replacement card.
Where can I get a list of pharmacies that
accept the card?
The Co-op Connections Card is accepted at over
60,000 retail pharmacies nationwide, including
CVS, Walgreens, Wal-Mart, Target and more.
You can find participating pharmacy locations
on the website or by calling your cooperative .
How are these pharmacy discounts
different from traditional prescription
insurance?
This plan is not insurance; it is a pharmacy
discount. The card provides immediate
discounts at the pharmacy. Upon presenting
your card to the pharmacist, you will pay the
lower of a discounted price or the pharmacy’s
regular retail price. There are no forms to fill
out and no limit to the number of times you
can use the card.
Can I use my Co-op Connections Card with
my current insurance benefit to reduce
my costs?
Your card cannot be used with insurance.
However, use your card to buy prescriptions not
covered by your insurance at a discounted rate.
Will I always receive the lowest price?
Yes. You will receive the best price available.
On occasion, pharmacies will price a particular
medication lower than the discount rate
provided by the card. If that occurs, you will
receive the lower price.
Screenshot of the connections.coop website showcasing discount and member offers, including the search
feature and categories on the left side of the web page that allows you to find local merchants who accept the
card and offer you benefits.
Can I find out the discounted price of
my prescriptions before going to the
pharmacy?
Yes, if you know the name, strength and
quantity of the medication, you can find the
discounted price of the medication on the
website or by calling (800) 800-7616.
J A N UA R Y 2 0 1 1 29
Tom Jones
GCSECA
CEO
AZ-55 Postmaster: Send address changes to Currents, 120 N. 44th St. Ste. 100, Phoenix, AZ 85034-1899
My Perspective
We’re Different—and That’s a Good Thing
Cooperatives are different
from other business you deal
with. To tell you the truth, we
like being different. And the
fact that you are reading this
article shows you may like
that difference, too.
Cooperatives are different
because they were formed to
look out for their members.
Now, more than ever, that’s
important because cooperative boards, employees, members and legislators at the
federal and state levels need to
work together to keep electric
bills affordable.
Congress did not pass a
comprehensive climate bill
last year. This January, the
U.S. Environmental Protection
Agency began regulating
greenhouse gasses—an action
made possible by a 2007 U.S.
Supreme Court decision, followed by rulings allowing the
EPA to use the Clean Air Act
to curb carbon emissions.
Policies dealing with coal
ash and even more stringent
controls on other power plant
emissions could also lead to
higher costs.
Arizona’s renewable energy
requirements also have led
to higher electric bills. It is
hard to predict the future,
but one thing seems certain:
Government regulations are
going to increase the cost of
doing business, and most of
that cost will be passed on to
consumers.
New regulations won’t be
the only culprit. Prices for
fuel, materials and equipment
will continue to rise.
Although the recent economic slump and corresponding drop in electricity use
provided some much-needed
breathing room, soon cooperatives will need to build new
power plants, requiring a significant long-term investment
of time and money.
Cooperatives are committed to keeping their members
informed about policy changes
that will affect electric bills
through channels like Currents
magazine, member meetings
and our websites.
Cooperatives are going to
do everything they can to
keep electric bills affordable.
To accomplish that, cooperatives are controlling costs
through innovation. The website www.TogetherWeSave.com
shows how little changes—
sealing air ducts, replacing old
appliances or improving home
insulation—can add up to big
savings on electric bills.
Cooperatives also offer
home energy audits to make
sure members get the best
value out of the energy used
every month.
Nationally, co-ops are
meeting members’ power
needs with a diverse fuel mix,
including renewable energy.
While co-ops are affordable
and innovative, above all else
they are member focused. No
matter what comes their way,
co-ops will continue to put
members first.
Members have a voice in
how a co-op operates. At
annual meetings each year,
members have the opportunity to elect fellow members
to the board of directors to
represent their interests.
Member control means coops are accountable to those
served and are dedicated to
assisting their communities.
Local money stays at work
close to home.
Costs are rising for all of us,
but when it comes to electric
bills, co-op rates are set simply
to cover the cost of doing business—not to generate profits
for distant stockholders.
The bottom line: Co-ops
exist to serve and meet member needs for safe, reliable and
affordable power.
As you can see, co-ops are
different. No matter what the
future brings, one thing is certain: Cooperatives are looking
out for their members.
Tom Jones, CEO, GCSECA
Grand Canyon State Electric Cooperative Association, Inc.
120 N. 44th St. Ste. 100 • Phoenix, AZ 85034 • Phone: (602) 286-6925 • Fax: (602) 286-6932 • www.gcseca.coop
Board of Directors: Jeff Larson, President; Don Anderson, Vice President;
Cecil Carlile, Secretary; Carlos Tejeda, Treasurer; Joe Anderson; Ray Barmore;
Frank Downs; Creden W. Huber; Joe Kay; Jerry Kempton; Donald W. Kimball; Gene
Robert Larson; Richard Lunt; Max Peck; David Plumb; Barbara Stockwell; Marsha
Thompson; Charles Wiese. Chief Executive Officer: Tom Jones.
32
J A N UA R Y 2011