PRESS RELEASE
Sault Ste. Marie, Michigan
Feb 13, 2007
Lee M Baatz - Assistant Vice President - Rates, Edison Sault Electric Company
- 906-632-5170
Combined
News Release from
Edison
Sault Electric and Cloverland
Electric Cooperative
The current historic low
levels of
Lake Superior
are having an unwelcome effect on the customers of Edison Sault Electric (ESE)
and Cloverland Electric Cooperative (CEC). The International Joint Commission (IJC)
is mandated to regulate lake levels on the Great Lakes and follows very
stringent guidelines in allowing flows from
Lake Superior
into the lower lakes. If
Lake Superior
is experiencing extremely low levels as is currently the case, the IJC mandates
that a minimum flow formula be adhered to. The minimum flow formula is meant to
1) ensure that Lake Superior levels are maintained above seasonal/historical low
levels as much as practicable and 2) that shipping navigation has adequate depth
levels to transverse the entire Great Lakes system below
Lake Superior
. All other considerations such as water for hydro power generation are given
lower priority as they must make do after the mentioned two points are adhered
to.
ESE and CEC are very
dependent on having maximum water flows available for ESE's hydro plant to
generate low cost electricity. The combined 38,000 customers of these utilities
paid $2.9 million dollars in higher billings in 2006 due solely to the ongoing
decreased levels of
Lake Superior
. Severely reduced flows from
Lake Superior
allowed the ESE hydro plant to only produce 156 million kilowatt hours in 2006.
Under the most optimum water flows, the ESE hydro plant can produce 228 million
kilowatt hours. The 72 million kilowatt hour difference had to be purchased from
outside and much more expensive sources.
Unfortunately, the forecast
for 2007 appears to be even bleaker as the levels of
Lake Superior
are projected to be at or below their historic all time lows for most of this
year. If water releases from Lake Superior continue at their current low levels,
the ESE hydro plant may see its lowest electricity production ever, down to 110
million kilowatt hours. This is equivalent to less than 50% capacity if the
plant were operating under the most favorable water release conditions.
The lost potential
production of 118 million kilowatt hours will have a serious impact on customer
bills as these kilowatt hours must be purchased from outside and more expensive
sources. Using 2006 prices as a guide, ESE and CEC customers may be faced with
paying as much as $4.8 million dollars in higher electric costs due solely to
the decreased levels of
Lake Superior
. This represents a 12% increase for the cost of power to the two utilities. By
state law, this increase in customer billings is simply a pass through of
outside purchased power costs as both ESE and CEC experience no profits
whatsoever from these added costs.
However
and even with the extremely low water available for electric hydro generation,
the customers of ESE and CEC still have rates that are below both state and
national averages. Currently and with the most recent information available, the
rates for residential customers of Edison Sault are 20% below the
Michigan
average and 30% below the
USA
average. The customers of Cloverland Electric have the lowest REA rates in the
state and their customers' rates are 18% below the
Michigan
average for the REA group.
***end***
