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					Testimony before the Missouri Legislature’s Joint Committee on Missouri’s Energy Future -- Nov. 2, 2009 Roger Clark, director of engineering and operations Associated Electric Cooperative Inc. Associated Electric Cooperative generates electricity for:  39 cooperatives in Missouri, with almost 700,000 meters  89 % of members are residential consumers, about 1.5 million Missourians

Co-op members who receive the electricity generated by Associated fall into the following demographic groupings:      Nearly half of our member households – 46 % -- earn annual gross incomes of less than $40,000 54 % of members report average monthly bills over $100 37% are retired and for those members over 65, 70% earn $40,000 or less We know from Census Bureau data that median household incomes lag metro areas by 28% As you are aware, our cooperative structure means that those who are interested in Missouri’s energy future are those paying the bill at the end of the line.

As a wholesale power provider, one of our biggest responsibilities is to plan future power plants so that rural electric cooperative members will have reliable, affordable electricity in the future. Until this year, electric cooperatives were growing at a rate that required about 100 megawatts more power each year, or enough power to supply about 30,000 more households.   This can be attributed to a number of factors from commercial and industrial development to the conveniences of technology and the load demands. Planning for that load growth is important because most power plants take years of planning and construction before they actually deliver electricity.

We are at a point where we will need more power in 2011, and we have a major natural gas-fired power plant under construction. But that picture of growth is changing. Just this year we are measuring load growth that is slower than previous years.

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We believe this slowdown in load growth is partly due to the economy and will return in the near future.

 Energy efficiency can also affect electric load growth whether from the energy efficiency programs our co-ops implemented in 2008 or the efficiency the consumers impose on themselves to reduce their electricity cost. Our cooperatives have committed over $30 million for energy efficiency programs to help our members save money on their electric bills. We have the opportunity for further gains from energy efficiency measures. We continue to see electric load growth in the future and will need to invest in additional power generators. We believe nuclear generation has a bright future. This type of financial commitment ($6-8 billion) is more than any one utility can take on alone. Without revoking the construction work in progress provision, financing a nuclear project remains prohibitive. We could partner with other utilities on a nuclear project in Missouri or elsewhere. We expect to need a major project for baseload capacity in the 2020 timeframe. Power generation alone does not get the job done when it comes to supplying homes, farms and businesses with electricity. That requires a reliable, robust transmission grid as well.  When we see transmission problems developing, we know how to solve them.  Associated and the 6 cooperatives providing transmission in Missouri project investing about $470 million in transmission through 2019.  An example of our commitment to making sure our co-op members have adequate transmission is a 100-mile high-voltage line we have under construction now. Everyone understands the need for transmission, but when it comes to placing transmission lines on the landscape, objections can arise. For this reason being able to continue to use eminent domain when necessary is important. Because we serve nearly the entire rural area of Missouri -- more than 70 percent of the land mass -- our transmission system is extensive, although cooperatives typically serve far few consumers per mile of line. Cooperatives in Missouri average 5.5 members per mile of line. Transmission also is important in providing a way to connect alternative energy sources to consumers. Associated Electric Cooperative was the first and remains the state’s leading utility to provide Missouri wind power to its consumers. With 75 commercial wind turbines and 150 MW of capacity online today, AECI has contracted for an additional 150 MW currently under construction and available this summer.

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 All four wind farms are expected to produce the amount of energy used by about 55,000 member households when considering the nature of wind power and the varying ways members use electricity.  Because wind is intermittent, Associated supplements it with fuel-based generation to ensure reliable electricity for members. Our largest and least expensive sources of generation are our coal plants. Coal still provides our members with 80% of their energy needs. Associated relies on a mix of resources to serve its members. Rural electric cooperative members to date in 2009 received: 81 percent of their electricity from coal-based units; 7 percent from natural gas units; 8 percent from hydropower; 1 percent from wind power; and 3 percent from purchases of electricity Besides this major responsibility of making sure the power supply is available, the carbon cap-and-trade legislation that is also on your agenda today is a huge concern for Missouri’s electric cooperatives.  Because coal generation produces more carbon dioxide per unit of electricity, our state will be disproportionately affected in a negative way.  It will cost much more to produce electricity for Missouri electric cooperative members.  The proposed legislation would cause Missourians to pay rate increases averaging between 12% and 26% starting in 2012 with the potential to reach rate increases of up to 50% should utilities be forced to switch from coal to natural gas for a significant portion of their fuel in order to comply with this federal legislation. Rate increases of between 25% and 42% may be experienced by 2020 and could reach 77% under the case where utilities are forced to switch to more natural gas fired generation.  Because we are a cooperative, those members who pay all of our costs will pay much more for electricity. According to the federal Energy Information Administration, Missouri has the 14th lowest average residential retail price for electricity in the country, and we’re not a coalproducing state. Retaining that beneficial position for co-op members and the rest of our state is a strength and major contributing factor to our quality of life.

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