Our Continuing Strategy to Provide Cost Effective Electricity Supply

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Pascoag Utility District (Pascoag) has been watching with great interest the significant Standard Offer price increases many utilities in New England are facing due to extremely high natural gas prices in the winter, which also drives electric power prices.   Pascoag has been able to avoid such increases due to our status as a public power, quasi-municipal utility owned by our customers.  In fact we recently requested a small rate decrease which was approved by the State of Rhode Island Public Utilities Commission for implementation beginning January 1st.
As a public power entity, our Pascoag customers have preferential entitlements in low-cost federal hydropower projects in New York along the St. Lawrence River, which helps to meet a good part of our supply needs.  Additionally, Pascoag has benefited from our other long-term power supply procurement contracts that have helped to avoid the risk of short term price spikes such as we are seeing elsewhere in New England.  But this does come at some risk.  In our current regulatory process, unlike similar municipal/public power processes in other New England states, Pascoag is not exempted from retail competition requirements (the ability for customers to switch suppliers).  This puts us somewhat at odds with our desire to secure the most cost effective power resources over a longer-term horizon.  The risk is that if substantial numbers of our customers decided to switch suppliers due to some short term price anomaly, the remaining customers could be faced with then higher costs to pay for our previous commitments.
My view is that Pascoag and its advisors have the where-with-all to make great power supply choices on behalf of our customers.  We are publicly owned, so look only to provide the most cost-effective services with no other motives.  Our view is that this is one of our prime responsibilities in today’s difficult power supply world.  We believe that it is in the strength of our total customer base that we will continue to get the best power deals.
In summary, I believe that Pascoag should once again take on 100% of this important power supply responsibility. In fact since 1996 when the Standard Offer requirement came into existence, Pascoag has  done such a decent job in providing a cost-effective power supply, that not one customer has left our Standard Offer Service to go to a different supplier.
I will be leading this discussion at our next Pascoag Utility District Board of Utility Commissioners meeting on January 26 at 6 p.m.  I welcome any of our customers who are interested in this subject to attend and provide their input and thoughts.  Once we have vetted this together, if our Pascoag customer base is supportive, we can jointly work together to strategize the best process to once again implement the full power supply responsibility for Pascoag Utility District.

Michael R. Kirkwood
General Manager

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