A new report released today reveals that Rappahannock Electric Cooperative (REC) pays above-market rates for the wholesale power it buys from Old Dominion Electric Cooperative (ODEC). REC, one of the largest retail electric co-ops in Virginia, provides retail electric service to more than 150,000 meters spread across 22 counties and 11 towns. When a retail co-op pays above-market rates for wholesale power, the higher costs are generally passed through to consumers, in this case REC’s member-owners. Over the last two years, REC customers have been paying 1.5 to 2.5 cents/kWh more for power purchased from ODEC than they would have from purchasing power directly from the wholesale electricity market.
The report, by the nonprofit Institute for Energy Economics and Financial Analysis (IEEFA), compares REC’s wholesale power purchases from ODEC to what REC could buy directly on the wholesale market from the PJM electric grid, which serves Virginia and other mid-Atlantic states.
Financial statements made public by REC this year reveal that in 2009 REC signed a contract with ODEC obligating REC to buy at least 95% of its wholesale power from ODEC for 45 years—through 2054. The IEEFA report states that for the past several years the cost of wholesale power from ODEC has been as much as 50% above the cost of wholesale power available from the PJM grid. The report further states that wholesale PJM grid power prices are expected to remain flat for the next decade, suggesting that REC’s contract with ODEC may require REC to pay above-market rates for years.
“Our research indicates that Rappahannock Electric Cooperative’s long-term power contract with the Old Dominion Electric Cooperative has locked it into high power prices for the foreseeable future,” said IEEFA energy analyst Cathy Kunkel. “We hope that REC will begin to question ODEC’s above-market prices.”
An electric co-op’s board of directors is elected by the co-op members, and is supposed to be accountable to those members. But many electric co-ops across the country have effectively unaccountable boards because of the co-ops’ lack of transparency, which make it impossible for co-op members to know what their boards are doing.
Seth Heald, a co-founder of Repower REC, a campaign of REC members urging democratic reforms and greater financial transparency at REC, said “electric co-ops are supposed to educate their members about important issues like the cost of wholesale power. But in my reading of REC’s magazine over the past decade I don’t recall seeing any mention of REC’s 45-year contract with ODEC, much less any explanation of why REC’s board approved that contract. This is why it’s essential that REC’s board institute reforms to make the co-op fully transparent and to ensure fair board elections with fully informed co-op members.”
Repower REC is part of a growing grassroots movement of electric co-op member-owners in Virginia and across the nation seeking to increase member control. For instance, members of Powell Valley Electric Cooperative in Tennessee and Virginia have banded together to form a grassroots group called PVEC Member Voices seeking to reform their own co-op to increase transparency and member involvement in decision-making.
Repower REC is calling on REC member-owners to join the effort to restore democracy and transparency at Rappahannock Electric Cooperative by visiting RepowerREC.com and signing up to get more information. Repower REC can also be reached on Facebook at @RepowerREC and by email at email@example.com.