Renewable energy gets Pierce Pepin's attention
ELLSWORTH -- While much of supplier Dairyland Power's generating capacity originates with coal-fired plants, renewable energy is playing an ever-increasing role in operations, Pierce Pepin Cooperative Services President and CEO Steve Healy told the local co-op's annual meeting audience late last month.
All states mandate renewable energy as part of utilities' generation, Healy said during the meeting in the Ellsworth High School Cafetorium. Related displays were set up around the room.
"In Wisconsin, a 10 percent renewable energy portfolio standard must be met by 2015," he said.
As of 2004 (the most recent figures available), the six percent level had been attained here, most in biomass and hydro, Healy said. Another type familiar to farmers comes from methane digesters, which convert manure through a digester into propane. Benefits go back to the farm.
"We're just getting into wind," he said, indicating 20 mega watts are to be added within the next 12-to-18 months. Power generated by this means is available only about 30 percent of the time with a good wind source.
The Evergreen program is an established effort of this kind, he said. The legislature has also mandated that low-income energy assistance be provided to eligible patrons.
Later, Healy reported on two issues in the legislative area that are important to co-ops. Fuel neutrality affects the market for electric heat. Electrician licensing is a shortcoming in Wisconsin, as there's no statewide definition for it like with plumbers. The only licensing regulations for electricians in this state are set by local municipalities.
Global climate change has become a reality to be dealt with, he said. A legislative bill has been introduced in Wisconsin addressing coal-burning's impact, and the work of a Clean Coal study group is underway. The state's Public Service Commission has issued a new strategic energy assessment.
Pierce Pepin Board Chairman Ronald Johnson further discussed global warming and another topic raised by Healy, the Focus on Energy program. Co-op participation in that program awaits an overhaul expected this summer, Johnson said. The sign-up period occurs in October, so there will still be time to enroll.
As for the warming, he contended every co-op is interested in cleaner air, but costs must be a consideration. Eighty percent of the electric industry is presently coal-fired. While nuclear would be a clean system, it's currently illegal to even plan such a plant in Wisconsin. Nuclear waste has been identified as a concern; yet, all such waste that's been generated to date wouldn't cover one football field, he understood. France's industry is 80 percent nuclear and the systems in all of Europe are 60 percent nuclear. He wondered if it's time to pursue this option.
Patron Bruce Robinson later commented the nuclear power issue in this country is more political than technical. Canada builds these plants and China has 18 of them. Because there's a limit to how much nuclear fuel is available, action should be taken soon. Meantime, spent nuclear rods can be recycled, he reminded.
Pierce Pepin's financial condition for 2006 was the subject of a report from Dennis Carson of Olsen, Thielen and Co., Ltd., the co-op's auditing firm.
Carson explained assets reflect a big investment, approximately 70 percent of which are in the physical plant (poles, transformers, buildings, trucks, etc.), amounting to $23,330,468 in 2006, an increase over $22,219,794 in 2005. Other property and investments in '06 totaled $4,296,375, compared to $4,135,566 in '05. Current assets of $5,253,943 were up from $4,695,541 in 2005.
Total members' equity was $12,804,235 last year, an increase from $11,407,051 the previous year. Long-term debt rose to $17,453,687 in '06 from $17,049,659 in '05. Last year's current liabilities totaled $2,711,757, down from $2,733,037 the year before. And deferred credits were at $392,659 in '06, while they were at $416,132 in '05.
Carson said the biggest expense came in cost of goods sold, at $9,501,655 in 2006, up from $8,637,152 in 2005. Total operating expenses last year were at $5,735,631, an increase over the $5,596,471 of the previous year. Interest expense in '06 amounted to $956,691, which rose from $815,896 in '05.
Net cash from operating activities last year showed $2,333,714 and $2,333,570 was used in investing activities. The net increase in cash and cash equivalents was $78,746 in '06, down from $214,859 in '05. The co-op began 2006 with $368,911 in cash and cash equivalents, ending it with $447,657, compared to a $154,052 start and $368,911 end in 2005.
Patrons asked questions during the annual meeting.
Ed Jakes wondered about the outcome of a fuel cell installation at Gene Meier's home several years ago and Healy responded there was a problem with the system following the load, depending on time-of-day.
Jim Peterson questioned the cost-effectiveness of outsourcing right-of-way work and its impact on employees; Healy answered the amount of resources is similar to before plus some of the workers are now employed by the company the co-op's using, and some high-maintenance equipment has been eliminated.
Brian Berg found Pierce Pepin's rates to be higher than those of two neighboring cooperatives, which Healy acknowledged, but explained Riverland benefits from a merger and St. Croix has a different topography as well as cost structure, besides some large customers.
Kurt Buckner also cited propane and electric rate increases, which Healy admitted, saying costs are bound to go up when the price of an average transformer rises 35 percent, as it did last year, for example. Robinson, referring to the coal-by-rail cost hike reviewed at last year's annual meeting, suggested building power plants near coal sources to avoid shipping, which Healy said has been done in some places, but easements for these are difficult to obtain.
Contact Bill Kirk at firstname.lastname@example.org or 273-4334.