That was the word from SREC Manager Ken Dizes at the Challis City Council’s July 13 meeting. Dizes also told city officials to expect a wholesale power rate increase from the Bonneville Power Administration (BPA), which the local co-op will have to pass on, probably starting in 2011.

SREC wants to phase in any BPA increase over time, not all at once, Dizes told the mayor and council members. It may be significant. He said city officials should be safe in budgeting for a 5 percent rate increase for 2011, although it’s still uncertain how much wholesale rates will increase.

Local rates have been stable with no increases for about five years. The co-op’s $30 monthly residential charge covers about half of fixed costs.

As a non-profit, SREC retains only enough margins to satisfy its bankers on mortgage ratios, said Dizes. It pays the rest out to members in capital credits on a 20-year rotation or 5 percent a year if finances allow. The co-op has between $9 million and $10 million on the books now, which works out to a capital credits payout of $350,000 to $450,00 per year.

The co-op is in good financial shape if its margins are high, but “we don’t really want to keep your money,” Dizes said. “It’s best if it’s in your pockets.”

Council members also asked Dizes about energy efficient lighting; voluntary shields on city streetlights for residents who want them to reduce glare and are willing to pay installation and other costs; conservation and the possibility of local power generation via wind and mini-hydro.

Auto meters

The automatic metering system is costing SREC about $600,000, with the other half of the $1.2 million total covered by the Department of Energy. Besides automatic meter reading, it will allow the co-op to charge for real time electricity use, charging more at peak use times and less at low-demand times.

This may soon be mandated by the federal government, Dizes said, so SREC decided to install the system now. Down the road, the co-op may be able to offer incentives in the form of lower prices for people who voluntarily agree to have devices installed in their homes to temporarily switch hot water heaters off during peak load times, decreasing demand on the system, Dizes said.

The automatic metering system will allow SREC to locate and fix outages sooner, as well as worn parts of the system where power loss is highest and to remote meter connections and disconnections.

Alternatives

“We’d love to find some local generation projects,” Dizes told Councilwoman Helen Winegarner, such as Al Morganroth’s mini-hydro plants. Rocky Mountain Power now buys Morganroths’ output. The co-op is looking at all alternative power sources it can, such as wind and mini-hydro, because it will make more sense as BPA raises its rates.

BPA is changing its rate structure, selling power at tiered rates, said Dizes. Tier 1 is the lower rate for preferred customers, supplied by the federal hydropower system. Tier 2 electricity must be purchased on the open market and is three times more expensive. Energy conservation is now seen as a resource that can defer the need to bring additional power generation online. Alternatives make more sense financially if SREC can’t buy all of its power at lower Tier 1 prices.

Demand is high for electricity produced by the federal hydropower system and output may shrink if Federal Judge James Redden takes over management and demands more spill over dams to benefit threatened and endangered fish.

“Conservation or energy efficiency will help keep us off Tier 2, so we’ll have programs to encourage people to conserve,” Dizes said.

Lighting

The SREC board is willing to work with the city on more energy efficient lighting, Dizes said, and is checking with vendors to find a program that works. So far, all alternatives are expensive, but when it makes financial sense, the co-op will partner with the city on a program. In past years, SREC replaced mercury vapor lights with high-pressure sodium because it made sense financially. While LED lights are very efficient, they have a high failure rate and may not be the answer.

The city is drafting a letter to SREC informing the board that residents don’t need city approval to ask the co-op to install shades on streetlights near their homes to reduce glare. They just need to pay the cost.

“We are on record as approving [of shades] if it’s OK with SREC,” Mayor Mark Lupher said.

“Good,” Dizes replied.

“We need to stay engaged,” Dizes told city officials. “The more you know, the better for the co-op. Many minds make for a stronger business.”

“I really appreciate what you’ve tried to accomplish,” said Council President Meghan Kircher, “by being open to new ideas. For a while, we didn’t have that. The more people know, the better.”

“Meghan, I really appreciate that,” Dizes said. “Our board realized the same thing.” To that end, Dizes gives annual reports to local governments and writes articles for the back page of Ruralite Magazine. The co-op also posts lots of information on policy changes and the like for members on its website and holds some meetings in Stanley and May.