Rural Missouri - February 2011 - (Page 10)

A powerful idea Associated Electric celebrates 50 years supplying power to rural people here are still some folks around who remember the days when electric cooperatives did not have enough power to properly serve members. In the early days, they were desperate for a source of wholesale power to get their operations underway. Those pioneers signed contracts with a hodgepodge of municipal or private power companies that let suppliers cut off power during periods of high use. Cooperative members often found they were second-class citizens when city power plants reached capacity. This often happened at inconvenient times, such as milking time on the farm. That changed when the electric cooperatives formed their own generation and transmission cooperatives, which pooled each system’s resources to build power plants. The future was certain when Associated Electric Cooperative was formed in February 1961. This month marks the 50th anniversary of Associated, which eventually took over the generation responsibilities. Today, most of Missouri’s electric cooperative consumers are served by a three-tiered system — generation, transmission and distribution — that is unique to Missouri. (Only Citizens Electric receives power from another source.) How this system was built is a fascinating story of how a group of rural people — blissfully ignorant of what an impossible task they were attempting — succeeded in raising the standard of living for the entire state. Today, Associated Electric, based in Springfield, is one of the largest and most successful generation cooperatives in the nation. It has $2.5 billion in assets and controls 5,237 megawatts of power. Associated owns two coal-fired power plants, three combined-cycle natural gas plants, four peaking gas units and one oil unit. It buys the entire output of four wind farms and it is the largest recipient of power from the Southwestern Power Administration’s hydroelectric dams. Associated has 174 interconnections with other utilities and can wheel power across 9,518 miles of transmission lines. More than 875,000 rural people in Missouri, and parts of Iowa and Oklahoma, are served by Associated’s power plants. But in 1961, Associated was just an idea on paper. At the time, the six regional transmission cooperatives — Central Electric Power Cooperative in Jefferson City, KAMO Power in Vinita, Okla., M & A Electric Power Cooperative in Poplar Bluff, Northeast Missouri Electric Power Cooperative in Palmyra, N.W. Electric Power Cooperative in Cameron and Sho-Me Power in Marshfield — were all generating electricity for the cooperatives. As early as 1942, the idea of a single large electric cooperative to provide power for all was considered by Missouri’s electric cooperatives. Most bought shares in Sho-Me Power, which originally was planned to reach statewide. In time, however, the regional concept for generation made more sense. In the late 1940s, the power-supply situation was critical for electric cooperatives. Lewis County Rural Electric Cooperative, for example, had gone to court to prevent its supplier, the city of Canton, from cutting it off completely. Missouri Rural Electric Cooperative had been notified by the city of Palmyra that its contract would end in six months. Just in time, the cooperative power plants came on-line, and once-harried managers were able to T by Jim McCarty jmccarty@ruralmissouri.coop When this photo was taken in 1971, Associated Electric’s Thomas Hill Energy Center had two units that burned 5,000 tons of coal daily to supply 483 megawatts of power. Today, Associated controls 5,237 megawatts. announce to members that they could finally use all the power they wanted. But co-op members in the baby-boom era were so hungry for power, even these plants could not keep up with the demand. In the fall of 1960, representatives of the state’s electric cooperatives met in Springfield to discuss the formation of a super-cooperative that would later become Associated. Its original intention was to swap power from the federal hydropower projects in southwest Missouri — useful primarily for peaking power — for firm energy from baseload plants owned by private power companies. “Missouri co-op leaders say the arrangement, after contracts are finally worked out, will assure the rural electric cooperatives a secure supply of power to meet the expanding needs of members,” read an article in the Rural Electric Missourian of that era. Though it would take time, that’s exactly what happened. In 1966, Associated built its first power plant at Thomas Hill in north-central Missouri. But demand for electricity, growing at the rate of 12 percent per year, forced the construction of more and more generation capacity over the years. “In six years, Associated must have additional generation and transmission facilities equal to those needed by Missouri electric cooperatives in the last 36 years,” reported Associated Manager Gerald Diddle in an article for the February 1975 Rural Electric Missourian, the predecessor of Rural Missouri. When a second unit at the New Madrid Power Plant was built in 1977, Associated operated what was then the largest cooperative-owned power plant in the nation. Besides a tremendous push for new construction, Associated’s leaders had to come up with creative ways to finance these additions. To build its first power plant in 1966, Associated borrowed $30 million from the Rural Electrification Administration. By comparison, in 1979 Associated negotiated the largest loan guarantee in the history of the rural electrification program: $1.4 billion. Associated has come a long way in its 50-year history. Its leaders have had to deal with two energy crises, coal strikes, mechanical failures and increased environmental regulations, along with droughts, floods, ice and windstorms that wreaked havoc on its assets. Yet it has remained strong thanks to a leadership composed of the best and brightest employees who continue to work for the best interests of the members at the end of the line. This is ensured by a board that includes managers and directors from the six transmission cooperatives it serves. Associated’s board president, Emery “Buster” Geisendorfer Jr., is a cattleman from La Grange and a director elected by members of Lewis County Rural Electric Cooperative. He also serves on the board at Northeast Missouri Power. “I often say the people who put this together were extremely deep thinkers,” Geisendorfer says. “They had to be good, but they also had to be lucky because it sure worked well. It’s just a class act.” He says most members have no idea how much the partnership with Associated has saved electric co-op members over the years. “I guess most members don’t realize this, but Associated was able to keep rates low by its ability to produce all the power we need and then sell any excess on the open market. That’s a big thing for members. The decisions made at the Associated table have always been made with respect to the costs for the consumer.” Over the years, Associated’s board has made sound financial decisions that have resulted in an AA rating from independent, third-party rating agencies. This has helped the cooperative obtain the best interest rate possible on multi-million-dollar projects, which has saved members money. As it moves into the future, Associated’s leaders must make some tough decisions on the future power supply for a growing electric cooperative membership. Forecasts show a need for additional generation by 2023. Associated’s current strategy is to work with the state’s other power suppliers to keep open the nuclear power option. 10 WWW.RURALMISSOURI.COOP http://WWW.RURALMISSOURI.COOP

Table of Contents for the Digital Edition of Rural Missouri - February 2011

Rural Missouri - February 2011
Table of Contents
Comments
Columns
Life Behind Bars
A Powerful Idea
Mail Bag
Angels Among Us
Out Of The Way Eats
The Store Time Forgot
Hearth and Home
News Briefs
For the Birds
Out With the Old...
World Wide Wood
Marketplace
Around Missouri
Neighbors
Just 4 Kids

Rural Missouri - February 2011

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