Local Weather Forecast
Today: Current:67	Sunday: 92/70	Monday: 91/71
Complete Forecast for  Sep 07 2008

TOP JOBS

By BETTY WATERS
Staff Writer

LONGVIEW — Three East Texas businessmen and an Austin-based organization Thursday called Southwestern Electric Power Company’s planned rate hike to help finance construction of a power generating plant in southern Arkansas a “raw deal” for SWEPCO customers in East Texas.

They lamented during a news conference at Skinner’s Grocery & Market that local retail customers cannot afford a “double digit rate hike” for electricity to pay for a new plant an administrative law judge concluded is not needed. And they asked opponents of the plant to send letters expressing their opposition to the Public Utility Commission of Texas.

SWEPCO released a written response maintaining SWEPCO “has a long track record of low rates in East Texas,” has not implemented a rate increase for its Texas customers in more than 20 years and that the utility’s average residential, commercial and industrial rates are less than state and national averages.

SWEPCO insisted it needs the plant to meet electricity needs of its retail and wholesale customers.

SWEPCO plans to build the 600-megawatt John W. Turk Jr. Power Plant near Fulton in Hempstead County, Ark., about 15 miles northeast of Texarkana, to provide power 24 hours a day to the utility’s customers in Arkansas, Louisiana and Texas.

SWEPCO has approximately 168,000 customers across East Texas in cities including Longview, Gladewater, Gilmer, Big Sandy, Overton, Hawkins, Kilgore, Henderson, Mineola, Carthage, Marshall and Center.

The PUC is scheduled to review and could render a decision on July 3 on SWEPCO’s plans for the Arkansas plant. Named in honor of an employee who pioneered the company’s shift from natural gas to coal in the 1970s, the Turk plant is projected for completion in 2012.

A major issue raised by opponents during the conference is their belief that retail customers will subsidize wholesale customers.

In a company statement, the utility countered that retail customers will not subsidize wholesale customers and that all segments of SWEPCO’s customers will pay their fair-share allocation of costs under state and federal regulatory oversight.

But Brant Brantley, of Skinner’s Grocery, said, “I feel SWEPCO is building this plant to generate extra electricity that they can sell on the open wholesale market, go into the market they have competitors in and charge a lower price than (competitors) to increase their profits at our expense as business owners.”

Vowing to do everything he can to fight the plant and rate increase, Brantley said, “We cannot afford any rate increases … we just cannot pay an extra $6,000 a year more in electricity that’s not even needed. The price of everything is ridiculous right now.”

Doug Edwards, director of operations for eight Whataburger fast food restaurant franchises in East Texas, also theorized the new plant will be funded partially by local customers so SWEPCO can sell electricity on the open market to other areas for a profit.

The proposed electricity rate hike will cost his company $30,000 extra a year, which Whataburger will have to cope with on top of price increases for supplies and fuel, Edwards estimated. His biggest concern, he said, is for his company’s 300 employees, most of whom are paid slightly more than the minimum wage.

“I don’t see how people can afford to pay the electric bill along with higher gas prices and higher food prices,” Edwards said.

Dustin Bobbitt, of Austin Furniture in Marshall, worried the rate increase leaves customers with less discretionary income.

Bobbitt’s message to SWEPCO officials was: “If you want to expand power sales on the wholesale market, that’s fine, but charge the wholesale customer for that power, not those of us who are captive retail customers of the power company.”

Eric Bearse, spokesman for Texas Electric Ratepayers Alliance, said increases in the cost of living over a year ago are “simply astounding” and electricity consumers cannot afford higher electricity rates. SWEPCO’s proposed rate increase, he claimed, will mean the average grocery store will pay $25,000 more a year for electricity, the average hospital will pay $174,000 more a year, local manufacturers will pay more than $200,000 more and the average department store, $45,000 a year.

The electric bill for the average residential rate payer will go up $210 a year, Bearse claimed. That hike, along with increases of $830 for gasoline and $780 for groceries, will raise the cost of living $2,600 more than last year, Bearse calculated.

“SWEPCO is engaged in an elaborate charade to make local elected officials and business leaders think this plant is needed to serve retail customers. What SWEPCO is trying to pull is this … they want to charge local residents and business for additional power capacity and turn around and sell that power on the wholesale market at a subsidized price for other consumers not in this service region to get a competitive advantage by leveraging the captive retail base to do it,” Bearse charged.

Cost of the proposed plant is increasing even before start of construction, while projected demand for power six years from now has decreased by 350 megawatts, Bearse claimed.

SWEPCO rebutted in its written statement that the utility is building the plant to serve all of its customers in three states, not just East Texas, “with fair share allocation of costs from retail customers and wholesale customers across all three states.”

The company historically has allocated approximately 80 to 85 percent of its generation to retail customers and 15 to 20 percent to wholesale customers.

“We believe rates will go up less if Texas customers are served by the Turk plant than if we have to purchase power on the wholesale market. Even with the increases resulting from our construction program, SWEPCO rates will be significantly lower than the other utilities in the region,” stated the company statement.

SWEPCO pledged to continue to be a low-cost provider in Texas. A Texas utility rate comparison, compiled by Edison Electric Institute, showed SWEPCO’s average residential rate in Texas is 7.61 cents per kWh, which is lower than El Paso Electric at 12.24 cents per kWH, Entergy Gulf States at 10.09 and Southwestern Public Service Co. at 8.23. SWEPCO’s average residential rate in Texas is 20.23 percent less expensive than the state average and 30.5 percent less than the national average, according to the data.

SWEPCO’s average commercial rate in Texas is 24.7 percent less expensive than the state average and 34.42 percent less than the national average, while its industrial rate is 11.6 percent lower than the state average and 15.94 percent less than the national average.

With construction of the Turk plant, according to SWEPCO, the overall increase for a Texas retail customer using 1,000 kWh will be $14.82 a month, or 17.7 percent. For commercial and small industrial customers, the increase will be 11.6 percent; and for industrial customers, the increase will be 1.4 percent.

“Retail and wholesale customers have been served for decades through a fair-share allocation of costs regulated by the PUC and the Federal Energy Regulatory Commission. SWEPCO’s existing generation fleet was sized and built — using economies of scale — to serve the company’s retail and wholesale load in Texas, Arkansas and Louisiana with low-cost, reliable power,” the company stated. “SWEPCO expects its historical allocation of retail load (80 to 85 percent) and wholesale load (15 to 20 percent) to continue at roughly the same levels.”

Further, the company predicted, “ultimately the cost to Texas customers will be less with the Turk plant than if the company must meet the future energy needs of Texas customers by purchasing power on the more volatile wholesale power market.”