Friday, April 10, 2009

Rocky Rural Electrification Association, Chairman's Report,

Earl Graham is the Chairman of the Rocky Rural Electrification Association and also a Clearwater County Councillor.
The Rural Electrification Association owns and manages electric power poles and wires supplying electricity to farm steads and other rural customers who are the legal owners of the association. It is a non profit organization providing electricity at cost.

Chairman’s Report – 2008 Operations

The Rocky REA enjoyed another successful year in 2008. The administration and staff of your REA continue to do an excellent job of maintaining the existing distribution system while at the same time constructing additional lines to our new members. These functions have been performed on a cost effective basis while compiling an excellent safety record for members and employees.

The Rocky REA now has a member services total of 3,285, an increase of approximately 60 member services in 2008. This steady growth in membership continues to build on the solid foundation that has made your REA the healthy organization that it is today.

As you know, the members can purchase electricity from the Rocky REA in one of two ways:

1. Two year stable rate contracts

2. Government regulated rate option known as the RRO

Rocky REA members continue to sign stable rate contracts at a very competitive price. The current stable rate contract offered at 7.3 cents per kwh ends on December 31, 2010. There are certain members that will see their stable rate contracts end on December 31, 2009. These members may elect to enter into a new contract at that time.

Our energy division, Rocky Rural Power, has entered into very inexpensive forward hedge purchase contracts, providing energy for approximately 80% of our load for the next five years. It is these long term low purchase prices that enable Rocky Rural Power to offer our members such competitive stable rate contracts.

The influence of the market price of electricity continues to impact on the Government Regulated Rate Option (RRO). Market prices prior to July 1, 2008 accounted for 40% of the RRO rate. This was subsequently increased to 60% by the Alberta Government in compliance with the RRO regulations. The remaining 40% of the RRO rate formula is based on our excellent forward hedge price.

Beginning July 1st of 2009 the RRO will be based on 80% of market prices and only 20% of the forward hedge price. This will cause greater fluctuations in the RRO rate. The RRO has a somewhat complicated pricing structure, which uses the forward price of natural gas in the calculation of the RRO rate. The RRO regulation specifies that each month’s RRO rate be established forty-five days in advance. The RRO rate has been, on average 1.5 to 3 cents per kilowatt hour higher than our retail stable rate resulting in large savings for those members who have entered into a stable rate contract.

The technology of automatic meter reading continues to develop at a torrid pace. Automatic meter reading (AMR) or advanced meter infrastructure (AMI) will ensure accuracy and load settlement efficiencies. AMR/AMI would also eliminate the need for members to record and send in meter readings. Given the rapid development of this technology and impending government regulations, it is imperative that the Rocky REA selects an AMR/AMI system that will address the following criteria:

  1. cost effective and efficient

  2. meets specific needs of the Rocky REA members (eg. simple meter reading versus additional functionality such as internet, telephone and television services)

  3. provides solutions to the specific challenges of the Rocky REA (eg. Line of sight blockages caused by forested and uneven terrain)

  4. ultimately complies with future provincial regulation or at a minimum is easily adaptable to such regulation without excessive cash outlay

The Board and administration are examining the increasing number of AMR/AMI options that are rapidly emerging in this field with the goal of finding the one that provides the closest fit for our members.

In October, Jerry Reglin was appointed by the board to the position of General Manager. Jerry brings a strong business background to the REA. He is a Certified Management Accountant with a Bachelor of Management degree at the University of Lethbridge and an Operations Management diploma at the British Columbia Institute of Technology. In accepting this position, Jerry, wife Debbie and daughter Elise fulfilled prior plans to move to the Rocky Mountain House area, having purchased property here two years ago.

The board wishes to extend many thanks to Lyle Johnson who fulfilled the role of acting manager until the board could find a suitable candidate and Neil Godlonton who continues to provide valuable consulting services on certain special projects.

In conclusion, the Board of Directors would like to express their thanks and appreciation to the wonderful staff we now have. It has become cliché that an organization’s greatest assets are its employees. It is not a cliché at the Rocky REA. The board wishes to convey how fully they understand that the great success we continue to experience is a direct result of the skill and dedication of our staff. I would also like to recognize the contribution that the board of directors has made to the Rocky REA. The cooperation, support and experience of this group of leaders have made my first year as chairman enjoyable and productive.

The upcoming year will, without doubt, present the REA with continued challenges and opportunities. Given the track record and abilities of this team of board members and staff, we can move into the future with confidence and positive expectations.

Respectfully submitted

On behalf of the Rocky REA Board of Directors

Earl Graham, Chairman

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