Where Does Our Power Come From?
Tuesday, Dec 18, 2007 1:06pm

(Part Two of a Four part series
by General Manager Barron Christensen
reprinted from Texas Coop Power Magazine.)

Last month we looked at the basic science behind global warming and I also told you that in the present political climate it appears we will see laws passed that will limit the production of greenhouse gases. This month, in part two of this four-part series, I want to walk you through the generation resources that Bowie-Cass has and how they are acquired.

When it comes to acquiring power, there are basically two ways to do it. We can either own the generating plant and take the output of that plant or we can enter into a contract to purchase power from someone else who owns the rights to that power. But whether we own or contract for our power, there are advantages to partnering with others. If Bowie-Cass, on its own, wanted to acquire an ownership interest in a generating unit or to purchase power through a contract, we would be a very small player in a big market. As such, we would pay a high price for that power. On the other hand, by partnering with others, we can get the volume discount that comes from a larger purchase.

For this reason, Bowie-Cass partners with five other co-ops through an organization known as Northeast Texas Electric Cooperative or NTEC. NTEC was formed in 1972 with the other members being Upshur Rural in Gilmer, Panola-Harrison in Marshall, Rusk County in Henderson, Wood County in Quitman, and Deep East Texas in San Augustine. Cooperation among these six cooperatives means that together we can take care of our power needs at a lower cost than any one of us could on our own.

So how does NTEC work? Each of the six member cooperatives appoints two representatives to serve on the Board of NTEC. Board President Steve Delaughter and myself represent Bowie-Cass. We meet at least twice a month as a Board with the NTEC staff and with the engineers, attorneys and accountants that make up the support team. Together we work to ensure that the power that you need is available when you need it and that the price of that power is as low as possible. Whether we build or buy, it is necessary for us to plan years into the future. For example, we are presently finishing up negotiations that have been going on for the last two years to replace a contract that will not expire until December 31, 2009. If we are looking to build, the planning can take even longer. It may take a couple of years to negotiate the ownership agreement and an additional 4-5 years to actually build the plant.

Let’s now look at the generation resources that NTEC currently owns or has under contract. On the ownership side, we have a minority interest in three power plants. The Pirkey Power Plant near Hallsville, TX and the Dolet Hills Power Plant near Mansfield, LA are both powered by coal. NTEC also has an ownership interest in the Harrison County Power Project, a natural gas plant near Marshall, TX.

On the contract side, we have purchased power agreements with Southwestern Electric Power Company, Entergy and Southwest Power Administration. The contracts with SWEPCO and Entergy involve power generated from both coal and natural gas. The contract with the Southwest Power Administration is strictly for the purchase of hydropower.

So when you put everything together, about 53% of our power is provided through contracts and 47% is from ownership. As for the fuel mix, 59% of our power is currently generated from coal, 33% is from natural gas and 8% from hydropower. This diverse mix of fuels means that we are not putting all of our energy eggs in one basket.

History has shown us that the price of natural gas can change rapidly. In fact, since 2002, the price of natural gas has tripled. Having a significant part of our generation from coal has helped us keep our rates down compared to other utilities that have had more exposure to natural gas prices.

But what will tomorrow be like for electricity prices? That depends a great deal on what Congress does. The more aggressive we are in cutting back on greenhouse gas emissions, the more expensive the power will be. The technology that currently exists to reduce carbon dioxide emissions is costly. To develop new and better technologies will require some time and a lot of money.

So how will the use of our most abundant fuels, coal and natural gas, be affected by possible new global warming legislation? I’ll try and answer that question for you next month. See you then.

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