DEMCO

[DEMCO ] Good news for co-op members, the economy and the environment

AFTER MONTHS OF negotiations, DEMCO has successfully inked a new 10-year wholesale power contract that will go into effect in 2024 if approved by the Louisiana Public Service Commission. That’s good news for the cooperative’s 113,000 members, says CEO Randy Pierce, as it will bring more reliability and greater price stability, along with a more diverse power portfolio.

A separate 25-year contract tied directly to Amite Solar (a NextEra division) will provide about 15 percent of the total power supply load. The other 85 percent will come via a traditional wholesale contract with NextEra of Juno Beach, Fla. NextEra is a Fortune 200 company and one of the largest suppliers of wholesale electricity to public power entities in the U.S. The company has 15,000 employees and provides power to millions of customers in the U.S. and Canada, including 70 electric cooperatives and municipal utilities.

So just why did DEMCO decide to enter into a new power supply contract with NextEra? Numerous reasons—chiefly, the current wholesale power contract allows rates to fluctuate monthly based upon fuel costs that DEMCO cannot control. The new contract will allow DEMCO to lock in annual rates well before the beginning of each year to prevent month-to-month fluctuations.

“Between 65 and 70 percent of a DEMCO member’s bill goes to pay for wholesale power,” says Pierce. “Lowering and stabilizing that part of our cost leads to lower electricity bills for our members.”

In an economic impact study, Dr. James Richardson, professor emeritus at Louisiana State University in Baton Rouge, projected economic outcomes of lower electricity prices would result in DEMCO members saving $160 million over 10 years. Spending less on electricity, DEMCO members will likely spend these savings in other areas of the economy; almost $270 million in increased economic transactions, $90 million in additional personal earnings and over $12 million in state and local tax receipts. The economic impact would also create about 3,000 new jobs.

In other words, DEMCO members will feel immediate and substantial benefits. Pierce is excited about the potential of the new agreement.

“The contract that we put together gives us more options to adjust to conditions as they happen,” he adds. “It will provide our members with reliable, stable and competitively priced electric service for many years to come.”