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Rural Electric Tries a Little English

Fortnightly Magazine - March 15 1996

will be able to hold down the rates or even reduce the cost of their rates."

Buyouts of co-ops by IOUs are another story. And they can have a win-or-lose outcome. Last year, the Washington-St. Tammany Electric Cooperative staved off an attempt by Central Louisiana Electric Co. (CLECO) to take over its more than 14,000 member service area, even though CLECO spent as much as $2 million on a takeover campaign. "And they were offered substantial cash inducements to do that," English adds. "'If you sell out to us, why, we'll give you lower electric rates and so much cash' (em making all these promises."

By contrast, CLECO appears to have been successful in the buyout of the Teche Electric Cooperative. The $22.4-million deal must be approved by state and federal agencies and an all-requirements contract must be worked out with Cajun Electric, the bankrupt G&T. Some 85 percent of the 7,400-member co-op voted for the merger. Members now can expect a five-year freeze on rates that could be 20 percent less than the co-op's, along with capital credits that NRECA reports could average $800 per residence. The utility hopes the matter will be resolved with Cajun this month, says Christy Frederic, CLECO spokeswoman.

Distribution also will factor in keeping rates low. If a co-op can bail out of a G&T, it guts the G&T and makes it a stranded investment. "I think we have distribution co-ops that in the short term may feel that they could get better rates, and we have a lot of different groups that are dangling that promise in front of some of our distribution cooperatives," English says. "But I think the real question and what we have to address is, 'What happens in the long term? Is it really in your best interest to do this?'" He adds: "It's probably the uncertainty that makes it more attractive to listen to offers from groups making promises they may or may not be able to fulfill."

A break in the distribution impasse could happen sooner than he or others suspect. Four County Electric Power Association of Columbus, MS, filed suit in federal court on November 21, 1995, against the TVA after the authority refused to let it participate in an economic development program that gave credit against power bills for new and expanding business. This followed an earlier request by Four County to be released from TVA's power-supply contract. The co-op estimated it could save as much as $70 million over 10 years by going to a cheaper supplier. "They won't release us from the contract we have, but won't include us in the benefits other distributors are getting," says Harold Knight of Four County. TVA says it would lose millions of dollars from the 200-megawatt load.

Opting out of TVA is "the unthinkable," English says. "That's true not just of cooperatives but of other customers of TVA. They're looking around, no question about it.

"We don't want our membership, well, split [on this issue], but we don't want to see any surprises. And we want them to