— from Alex MacLeod —

In what has become an annual event, OPALCO put out a news release the other day letting us know our electricity rates are increasing yet again, this time by another 5%, effective January 1. It said the increase is necessary “to meet OPALCO’s cost of service, which is primarily driven by the cost of power from BPA, OPALCO’s energy-saving program and contracted labor expense.”

The good news “is members can keep their bills lower by using less electricity,” General Manager Foster Hildreth was quoted as saying.

While Hildreth’s statement is technically correct — it’s akin to saying the best way to save money is not to spend any — the reality of this and the string of rate increases since 2013 tell a much different story.

The clearest way to demonstrate this fact is to begin with OPALCO’s basic business model. Our cooperative collects revenue in essentially one way: By selling electricity to us, its members.

In 2013, it purchased 206 million kilowatt hours of electricity from BPA. That brought in about $21.4 million in revenue, which meant we paid .1037-cents per kilowatt hour. This year OPALCO expects to buy 189 million KwH of electricity and collect $26.4 million in revenue, which means we will be paying .1396-cents per KwH.

That is an increase of just under 35% in five years. The average monthly residential electric bill has gone from around $90 to about $130. Yet the annual cost of that electricity to OPALCO has increased just 12% during that same period, in part because we bought 17% less electricity.

So what gives? If this 35% increase isn’t to pay for electricity, what’s it for?

In the simplest terms, the answer is we’re paying for the infrastructure OPALCO is installing primarily to support its Internet business. While OPALCO’s administrative overhead has increased a staggering 20% — 8% more that the cost of purchased electricity — its total expenses have increased 37%. On top of all that, the cooperative’s debt has increased 225%, to $51.4 million from $17.5 million, the annual costs of which will travel deep into the future.

OPALCO continues to insist that all this infrastructure expense is necessary for its electric grid, and therefore it is legitimate to charge us for it as a “cost of (electrical) service.” Yet OPALCO had what was widely regarded in the industry as one of the most modern and efficient infrastructures before any of this spending began, the envy of many much larger electric services. If you want confirmation, just ask former GM and current board member Randy Cornelius. It is why he has voted against approval of OPALCO’s budgets since he was elected a director.

Think about it: What other business has raised its price 35% in the past five years? The U.S. Consumer Price Index, the most commonly accepted measure of inflation, rose less than 4% during the same period. Wages: Mostly flat. Real estate values: still far from where they were. Taxes: mostly unchanged.

What makes this even more troubling is these rate increases factor in only a fraction of the extraordinary looming cost of replacing the coop’s vital submarine power cables, essential to the delivery of our electricity. Instead, they have been driven by the infrastructure needs of Rock Island, which will serve only a small fraction of the membership and, to date, is most noted for its over-spending and under-performing against its own reduced business plan.

Case in point: In order for Rock Island to repay OPALCO’s $7.5 million start-up, OPALCO had to guarantee the new loan’s repayment, an action the board took in secret sometime last spring. The loan guarantee was needed because, on its own, no lender considered Rock Island credit worthy.

The Rock Island loan “repayment” was mentioned in the recent rate-hike news release, but left unmentioned was OPALCO’s guarantee of the loan, which means we’re still on the hook for it (and it may be a substantially larger loan — the secret way OPALCO has handled it provides no way to know.) Despite that, OPALCO used the “repayment” to signal that Rock Island “is now financially independent,” which the loan guarantee demonstrates clearly it is not.

So, Rock Island is made to look better than it is by “repaying” OPALCO ahead of plan, and OPALCO’s financials look better because that money is back on its books. But, in reality, it is just a paper shuffle, and not a particularly honest one at that, with OPALCO — us members, the ones who pay the bills — still holding Rock Island’s bag. The secret way it has been handled, along with the dishonest claim that Rock Island now is financially independent, should be red flags to the membership.

To be clear, this is not intended to be a screed against OPALCO having gone into the Internet business. Others can and have done that as they chose. Rather, it is a reminder, as our electric rates rise yet again, of how much this is costing each of us, and of OPALCO’s fundamental dishonesty about the real reasons why, and what it means for future rates.

We deserve better from our board and its chosen management.

(Alex MacLeod is a longtime OPALCO member who lives on Shaw.)

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