Controlling Your Costs
Manager’s Column
Controlling Your Costs Many incorrectly attribute the saying, “God helps those who help themselves” to the Bible. Others know that it was published in Poor Richard’s Almanac and presume it originated with Benjamin Franklin. In fact the concept of self-reliance Dan Hutt expressed in the popular idiom was repeated in numerous [email protected] philosophical and theological publications prior to Mr. Franklin’s almanac. It was the moral of one of Aesop’s Fables. In 428 B.C. Greek playwright Euripides wrote: “Try first thyself and after call in God; for to the worker God himself lends aid.” About twenty years later Sophocles wrote these words: “Heaven ne’er helps the men who will not act.” The origin of the concept goes back five thousand years to the earliest written documents of Mesopotamia. Self-reliance is more American than apple pie. It is the essence of Western character, and it was the inspiration for the formation of electric co-ops. The reliability and affordability of electricity is being challenged on many fronts. Seventy-five percent of your electric bill goes to pay for three things that are almost completely out of your local co-op’s control: taxes, debt service, and the electricity your co-op purchases to deliver to you. Over the past few years I’ve warned that political decisions and indecisions were leading to power costs that would challenge the affordability of electricity in this country. In five years wholesale power costs to your co-op doubled. We asked for your help to try to prevent it, but the political train ran us over. Now we have to get up, dust ourselves off, and figure out what we can do to help ourselves. When you live and breathe the electric co-op for as long as I have, you learn a lot about the challenges. It’s not easy to explain in a few words what consumers need to know to help lower electricity costs. I’m going to try. Every month your electric co-op receives a power bill that makes up more than half of what we charge you. It has a customer charge, an energy charge, and a peak demand charge. The peak demand charge has increased almost threefold in the past decade and now costs a lot more than the energy our members use. Historically utilities have not itemized peak demand on most consumer bills because metering demand was 2 September 2011 • Cooperative Connections
too expensive. Demand costs were not that significant and were just rolled into the energy costs. With the advanced metering technology that we and many other utilities now use, we can meter individual monthly peak demand. Instead of billing members an estimated demand cost in their energy, we could now bill each their appropriate share of peak demand costs. We’ve tried some things to help lower everyone’s demand costs, but, for the most part, they didn’t work.
Seventy-five percent of your electric bill goes to pay for three things that are almost completely out our your local co-op’s control: taxes, debt service and the electricity your co-op purchases to deliver to you. Our water heater control program is effective, but it is expensive and participation has been disappointing. We’ve asked everyone to limit electric usage during peak times, but without a personal incentive, few have. Beginning next year your cooperative plans to implement demand rates for all members. Without changing usage behavior, some members will see lower bills and some will see higher bills. All will have the opportunity to reduce costs by changing usage patterns. Your co-op will continue to invest in technology to allow the greatest flexibility in usage and will offer at cost-automation options for members to control their costs. We will give you the opportunity to help yourself. We didn’t ask for today’s energy challenges, but we’re sure going to do all we can to give you the means to help yourselves. It’s the American way.
2011-12 Heat Rate Set at 6.5¢ Since 1987, Black Hills Electric Cooperative’s members with electric heat have been able to take advantage of the co-op’s low-cost heat rate. Beginning in October, members with separately metered electric heat will pay just 6.5 cents per kilowatt-hour for heating their homes or businesses. For a person with an electric heat pump, the rate equates to propane at 70 cents a gallon. For resistive electric heat, the rate equates to propane at $1.40 a gallon. The heat rate runs through April. The co-op’s all-electric rate remains at seven cents per kWh. For details on the two rates, or to sign up, contact the office.
News
Briefs
System Demand Drives Rates Up (ISSN No. 1531-104X)
Board President – Al Perry Board of Directors Dwayne Breyer – Vice President Glen Reaser – Secretary Jim Preston – Assistant Secretary Gary Kluthe – Treasurer Dave Lindblom Alan Bishop
General Manager Dan Hutt – [email protected]
General Counsel and V. P. of Administration Walker Witt – [email protected]
V. P. of Operations and Engineering Alan Michalewicz – [email protected]
Manager of Marketing and Member Services and Cooperative Connections Editor Mike Chase – [email protected] BLACK HILLS ELECTRIC COOPERATIVE CONNECTIONS is the monthly publication for the members of Black Hills Electric Cooperative, 25191 Cooperative Way, Box 792, Custer, S.D. 57730-0792. Families subscribe to Cooperative Connections as part of their electric cooperative membership. Black Hills Electric Cooperative Connections’ purpose is to provide reliable, helpful information to electric cooperative members on matters pertaining to their company and living better with electricity. In accordance with federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, age, disability, religion, sex, and familial status. (Not all prohibited bases apply to all programs.) To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). Subscription information: Electric cooperative members devote 50 cents from their monthly electric payments for a subscription. Non-member subscriptions are available for $12 annually. Periodicals Postage Paid at Black Hills Electric Cooperative, 25191 Cooperative Way, Custer, S.D. 57730-0792, and at additional mailing offices. Postmaster: Send address changes to Cooperative Connections, P.O. Box 792, Custer, S.D. 57730-0792. Address all other correspondence to: Cooperative Connections, P.O. Box 792, Custer, S.D. 57730-0792 Telephone: (605)673-4461 Fax: (605) 673-3147 e-mail: [email protected]
A lot has changed in the electric utility is calculated on the basis of the highest demand during the month. industry in recent years. More governWith the 15,000-watt furnace above, ment regulation of the industry and the co-op pays $15.56 per kW, or other costs related to producing power $233.40, plus the cost of the kilowatthave driven members’ rates up. hours each month the furnace is used. It is important that co-op members The kilowatt-hour rate charged to understand that the price they pay for members includes usage and demand. electricity is sometimes less than the acHowever, with demand charges soartual cost to produce it. But by reducing ing, the kilowatt-hour rate members pay electricity demand or changing the time must increase as well. of day that electricity is used, BHEC’s More and more utilities are looking members can reduce system demand, lowering the cost the cooperative pays for electricity, which in turn reduces their own costs. But, what is demand and how can it be reduced? Demand is how fast you are consuming energy. Usage is the amount of electric energy you use. Turning on a 15,000-watt furnace will create a demand The above graph shows BHEC’s demand on July 17. The co-op typiof 15 kilowatts. If that furnace runs for cally has peaks in the morning and evening. If BHEC’s peaks coincide with peaks on the power supplier’s system, electricity prices are at five hours a day, it their highest. Moving usage from peak times to other times can save. would have usage of at a rate structure that includes a charge 75 kilowatt-hours each day. for demand and a charge for usage. This Most of us tend to use more electricrate keeps the cost per kilowatt-hour ity in the afternoon between about 2 lower and gives the member the opp.m. and 9 p.m. This is when we switch on the lights, air conditioning or heating portunity to control when and how they use electricity and reduce their demand system, TV and computer, and start charge. By making a few minor lifestyle cooking, taking showers and washing clothes. All of this activity contributes to changes, including spreading out chores that require large amounts of electricity, a significant spike in residential energy a member can reduce the demand on the usage and what is referred to as “peak electric system and help reduce his or her demand.” own energy costs. Reducing peak demand is not about stopping the use of electricity altogether but about thinking when and how you use appliances. Demand charges are the way your cooperative pays for the generation and distribution capacity it needs to meet peak demand that occurs from time to time. The demand charge your cooperative pays to its wholesale power supplier
BHEC’s summer peak occurs between 2 p.m. and 9 p.m. each day.
Cooperative Connections • September 2011 3
Co-op
News
SCADA Installations Near Completion Is My Electric
Company Really That Different?
BHEC’s resident electrician, John Eiring, above, completes the installation of system control and data acquisition at the Headquarters Substation. Eiring and Meter Technician Brian Hartmann are installing SCADA on the last of BHEC’s 13 substations. The equipment allows co-op employees to remotely monitor and control the substation switches and breakers. The system uses either phone lines or wireless radio frequency to get the data to BHEC’s office computer. The antenna at left sends the data to Rushmore Electric Power Cooperative in Rapid City where they can also monitor and control the substation.
BHEC’s Summer Peak Demand Periods
AM
PM
Low Demand
Peak Demand
With the hot weather, BHEC’s times of greatest electricity usage or peak demand period has expanded. The summer peak occurs in the afternoon between 2 and 9. These are the times that electricity costs the most for the cooperative to purchase and can affect your rates. 10 September 2011 • Cooperative Connections
Who owns your electric company? If you are a member of Black Hills Electric Cooperative, you can find the answer by looking in a mirror. At Black Hills Electric, you, and more than 7,300 other members, are the owners, and just like any other company, Black Hills Electric does what is best for its owners. As a cooperative member, you pay Black Hills Electric for the actual cost of producing and delivering energy. Funds remaining after bills have been paid and infrastructure built, go into members’ capital credits accounts. When BHEC’s board of directors deems it prudent, based on financial considerations, the capital credits are paid back to you. Because you own the company, Black Hills Electric Cooperative employees do what is in your best interest by providing you the best value possible. This means offering energy-saving programs, providing energy tips, educating members on ways to use energy more efficiently, being active in our communities and doing our part to protect the environment. This is the cooperative way of doing business. For information on programs and energy tips and conservation ideas, visit www.bhec.coop or call us at (605) 673-4461 or 800-742-0085.
Co-op
News
Line Dug Up For Road Construction
A CFL’s glass tubing contains about four milligrams of mercury. While this isn’t much, consumers should still take precautions if a CFL breaks
In the above photo, Dean Whitney, right, BHEC line foreman, and Travis Carlin, BHEC lineman, inspect the trench for the co-op’s three-phase distribution line north of Oelrichs. Earlier this year, the co-op moved and buried the line due to the planned construction of the Heartland Express. However, the South Dakota Department of Transportation decided to add additional approaches to the highway. Removal of top soil would place the wire too close to the surface, requiring the line to be deeper in those areas. Crews opened the trench and dug under the lines to gain the additional depth. Each 7,200-volt line must be buried four feet underground.
LeRoy and Lester
And be sure and call as soon as you get there...if they have cell coverage up there!!!
Scientific Corner
“Halfway through 2011, the year-to-date (January-June) average temperature for the United States is just 0.15°F above the long-term (20th century) average. Although it is certainly too soon to say for sure, there is a good case to be made that when the final numbers are in at the end of December, that 2011 will go down as another in a recent string (which now stands at three years and counting) of rather unremarkable years when it comes to the national annual average temperature. This run of near-normal years is growing evidence that the collection of relatively warm years experienced in the U.S. from 19982007 neither represented a new climate state in the U.S. nor a sustained uptick in the rate of warming which could be reliably extrapolated into the future.” — Anthony R. Lupo, PhD, Professor of Atmospheric Sciences at the University of Missouri-Columbia. His research has been in the areas of large-scale atmospheric dynamics, climate dynamics and climate change.
Cooperative Connections • September 2011 11
Controlling Your Costs Many incorrectly attribute the saying, “God helps those who help themselves” to the Bible. Others know that it was published in Poor Richard’s Almanac and presume it originated with Benjamin Franklin. In fact the concept of self-reliance Dan Hutt expressed in the popular idiom was repeated in numerous [email protected] philosophical and theological publications prior to Mr. Franklin’s almanac. It was the moral of one of Aesop’s Fables. In 428 B.C. Greek playwright Euripides wrote: “Try first thyself and after call in God; for to the worker God himself lends aid.” About twenty years later Sophocles wrote these words: “Heaven ne’er helps the men who will not act.” The origin of the concept goes back five thousand years to the earliest written documents of Mesopotamia. Self-reliance is more American than apple pie. It is the essence of Western character, and it was the inspiration for the formation of electric co-ops. The reliability and affordability of electricity is being challenged on many fronts. Seventy-five percent of your electric bill goes to pay for three things that are almost completely out of your local co-op’s control: taxes, debt service, and the electricity your co-op purchases to deliver to you. Over the past few years I’ve warned that political decisions and indecisions were leading to power costs that would challenge the affordability of electricity in this country. In five years wholesale power costs to your co-op doubled. We asked for your help to try to prevent it, but the political train ran us over. Now we have to get up, dust ourselves off, and figure out what we can do to help ourselves. When you live and breathe the electric co-op for as long as I have, you learn a lot about the challenges. It’s not easy to explain in a few words what consumers need to know to help lower electricity costs. I’m going to try. Every month your electric co-op receives a power bill that makes up more than half of what we charge you. It has a customer charge, an energy charge, and a peak demand charge. The peak demand charge has increased almost threefold in the past decade and now costs a lot more than the energy our members use. Historically utilities have not itemized peak demand on most consumer bills because metering demand was 2 September 2011 • Cooperative Connections
too expensive. Demand costs were not that significant and were just rolled into the energy costs. With the advanced metering technology that we and many other utilities now use, we can meter individual monthly peak demand. Instead of billing members an estimated demand cost in their energy, we could now bill each their appropriate share of peak demand costs. We’ve tried some things to help lower everyone’s demand costs, but, for the most part, they didn’t work.
Seventy-five percent of your electric bill goes to pay for three things that are almost completely out our your local co-op’s control: taxes, debt service and the electricity your co-op purchases to deliver to you. Our water heater control program is effective, but it is expensive and participation has been disappointing. We’ve asked everyone to limit electric usage during peak times, but without a personal incentive, few have. Beginning next year your cooperative plans to implement demand rates for all members. Without changing usage behavior, some members will see lower bills and some will see higher bills. All will have the opportunity to reduce costs by changing usage patterns. Your co-op will continue to invest in technology to allow the greatest flexibility in usage and will offer at cost-automation options for members to control their costs. We will give you the opportunity to help yourself. We didn’t ask for today’s energy challenges, but we’re sure going to do all we can to give you the means to help yourselves. It’s the American way.
2011-12 Heat Rate Set at 6.5¢ Since 1987, Black Hills Electric Cooperative’s members with electric heat have been able to take advantage of the co-op’s low-cost heat rate. Beginning in October, members with separately metered electric heat will pay just 6.5 cents per kilowatt-hour for heating their homes or businesses. For a person with an electric heat pump, the rate equates to propane at 70 cents a gallon. For resistive electric heat, the rate equates to propane at $1.40 a gallon. The heat rate runs through April. The co-op’s all-electric rate remains at seven cents per kWh. For details on the two rates, or to sign up, contact the office.
News
Briefs
System Demand Drives Rates Up (ISSN No. 1531-104X)
Board President – Al Perry Board of Directors Dwayne Breyer – Vice President Glen Reaser – Secretary Jim Preston – Assistant Secretary Gary Kluthe – Treasurer Dave Lindblom Alan Bishop
General Manager Dan Hutt – [email protected]
General Counsel and V. P. of Administration Walker Witt – [email protected]
V. P. of Operations and Engineering Alan Michalewicz – [email protected]
Manager of Marketing and Member Services and Cooperative Connections Editor Mike Chase – [email protected] BLACK HILLS ELECTRIC COOPERATIVE CONNECTIONS is the monthly publication for the members of Black Hills Electric Cooperative, 25191 Cooperative Way, Box 792, Custer, S.D. 57730-0792. Families subscribe to Cooperative Connections as part of their electric cooperative membership. Black Hills Electric Cooperative Connections’ purpose is to provide reliable, helpful information to electric cooperative members on matters pertaining to their company and living better with electricity. In accordance with federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, age, disability, religion, sex, and familial status. (Not all prohibited bases apply to all programs.) To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). Subscription information: Electric cooperative members devote 50 cents from their monthly electric payments for a subscription. Non-member subscriptions are available for $12 annually. Periodicals Postage Paid at Black Hills Electric Cooperative, 25191 Cooperative Way, Custer, S.D. 57730-0792, and at additional mailing offices. Postmaster: Send address changes to Cooperative Connections, P.O. Box 792, Custer, S.D. 57730-0792. Address all other correspondence to: Cooperative Connections, P.O. Box 792, Custer, S.D. 57730-0792 Telephone: (605)673-4461 Fax: (605) 673-3147 e-mail: [email protected]
A lot has changed in the electric utility is calculated on the basis of the highest demand during the month. industry in recent years. More governWith the 15,000-watt furnace above, ment regulation of the industry and the co-op pays $15.56 per kW, or other costs related to producing power $233.40, plus the cost of the kilowatthave driven members’ rates up. hours each month the furnace is used. It is important that co-op members The kilowatt-hour rate charged to understand that the price they pay for members includes usage and demand. electricity is sometimes less than the acHowever, with demand charges soartual cost to produce it. But by reducing ing, the kilowatt-hour rate members pay electricity demand or changing the time must increase as well. of day that electricity is used, BHEC’s More and more utilities are looking members can reduce system demand, lowering the cost the cooperative pays for electricity, which in turn reduces their own costs. But, what is demand and how can it be reduced? Demand is how fast you are consuming energy. Usage is the amount of electric energy you use. Turning on a 15,000-watt furnace will create a demand The above graph shows BHEC’s demand on July 17. The co-op typiof 15 kilowatts. If that furnace runs for cally has peaks in the morning and evening. If BHEC’s peaks coincide with peaks on the power supplier’s system, electricity prices are at five hours a day, it their highest. Moving usage from peak times to other times can save. would have usage of at a rate structure that includes a charge 75 kilowatt-hours each day. for demand and a charge for usage. This Most of us tend to use more electricrate keeps the cost per kilowatt-hour ity in the afternoon between about 2 lower and gives the member the opp.m. and 9 p.m. This is when we switch on the lights, air conditioning or heating portunity to control when and how they use electricity and reduce their demand system, TV and computer, and start charge. By making a few minor lifestyle cooking, taking showers and washing clothes. All of this activity contributes to changes, including spreading out chores that require large amounts of electricity, a significant spike in residential energy a member can reduce the demand on the usage and what is referred to as “peak electric system and help reduce his or her demand.” own energy costs. Reducing peak demand is not about stopping the use of electricity altogether but about thinking when and how you use appliances. Demand charges are the way your cooperative pays for the generation and distribution capacity it needs to meet peak demand that occurs from time to time. The demand charge your cooperative pays to its wholesale power supplier
BHEC’s summer peak occurs between 2 p.m. and 9 p.m. each day.
Cooperative Connections • September 2011 3
Co-op
News
SCADA Installations Near Completion Is My Electric
Company Really That Different?
BHEC’s resident electrician, John Eiring, above, completes the installation of system control and data acquisition at the Headquarters Substation. Eiring and Meter Technician Brian Hartmann are installing SCADA on the last of BHEC’s 13 substations. The equipment allows co-op employees to remotely monitor and control the substation switches and breakers. The system uses either phone lines or wireless radio frequency to get the data to BHEC’s office computer. The antenna at left sends the data to Rushmore Electric Power Cooperative in Rapid City where they can also monitor and control the substation.
BHEC’s Summer Peak Demand Periods
AM
PM
Low Demand
Peak Demand
With the hot weather, BHEC’s times of greatest electricity usage or peak demand period has expanded. The summer peak occurs in the afternoon between 2 and 9. These are the times that electricity costs the most for the cooperative to purchase and can affect your rates. 10 September 2011 • Cooperative Connections
Who owns your electric company? If you are a member of Black Hills Electric Cooperative, you can find the answer by looking in a mirror. At Black Hills Electric, you, and more than 7,300 other members, are the owners, and just like any other company, Black Hills Electric does what is best for its owners. As a cooperative member, you pay Black Hills Electric for the actual cost of producing and delivering energy. Funds remaining after bills have been paid and infrastructure built, go into members’ capital credits accounts. When BHEC’s board of directors deems it prudent, based on financial considerations, the capital credits are paid back to you. Because you own the company, Black Hills Electric Cooperative employees do what is in your best interest by providing you the best value possible. This means offering energy-saving programs, providing energy tips, educating members on ways to use energy more efficiently, being active in our communities and doing our part to protect the environment. This is the cooperative way of doing business. For information on programs and energy tips and conservation ideas, visit www.bhec.coop or call us at (605) 673-4461 or 800-742-0085.
Co-op
News
Line Dug Up For Road Construction
A CFL’s glass tubing contains about four milligrams of mercury. While this isn’t much, consumers should still take precautions if a CFL breaks
In the above photo, Dean Whitney, right, BHEC line foreman, and Travis Carlin, BHEC lineman, inspect the trench for the co-op’s three-phase distribution line north of Oelrichs. Earlier this year, the co-op moved and buried the line due to the planned construction of the Heartland Express. However, the South Dakota Department of Transportation decided to add additional approaches to the highway. Removal of top soil would place the wire too close to the surface, requiring the line to be deeper in those areas. Crews opened the trench and dug under the lines to gain the additional depth. Each 7,200-volt line must be buried four feet underground.
LeRoy and Lester
And be sure and call as soon as you get there...if they have cell coverage up there!!!
Scientific Corner
“Halfway through 2011, the year-to-date (January-June) average temperature for the United States is just 0.15°F above the long-term (20th century) average. Although it is certainly too soon to say for sure, there is a good case to be made that when the final numbers are in at the end of December, that 2011 will go down as another in a recent string (which now stands at three years and counting) of rather unremarkable years when it comes to the national annual average temperature. This run of near-normal years is growing evidence that the collection of relatively warm years experienced in the U.S. from 19982007 neither represented a new climate state in the U.S. nor a sustained uptick in the rate of warming which could be reliably extrapolated into the future.” — Anthony R. Lupo, PhD, Professor of Atmospheric Sciences at the University of Missouri-Columbia. His research has been in the areas of large-scale atmospheric dynamics, climate dynamics and climate change.
Cooperative Connections • September 2011 11
