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Amid flood of 2 On Your Side complaints, DEMCO promises big drop in power costs

1 month 2 weeks 5 days ago Thursday, December 02 2021 Dec 2, 2021 December 02, 2021 1:52 PM December 02, 2021 in News
Source: WBRZ

BATON ROUGE - After months of complaints over ballooning electricity bills, DEMCO says its customers can expect some relief early next year. 

The power company said in a news release Thursday that it is close to paying off costs associated with February's winter storm and the closure of one of its power suppliers in northwest Louisiana, costs which DEMCO says have been getting passed onto customers. 

"The good news is that we are close to paying off the winter storm costs, and we will soon see the end of higher costs tied to the Dolet Hills plant closing," DEMCO's statement read in part. "As a result, the monthly kilowatt-hour price from DEMCO to our members will decrease by about 25 percent beginning in early 2022."

For months, 2 On Your Side has fielded an influx of calls and emails from frustrated DEMCO customers over their skyrocketing power bills. 

Saint Amant resident Brandi Bourgeois said she recently received a $1500 Demco bill.

"I literally panicked," Bourgeois said. "Demco said they didn't have enough people to go read the meters and a lot of meters weren't working properly, so they were just estimating our bill."

Demco says they had a problem with the communication between meters and the remote automated readers because of disruptions like Hurricane Ida.

"We knew that was happening so Demco has done everything we can to make sure that we get those readings accurate," said Demco spokesperson David Latona. "If that bill is too high for that customer to handle, we'll work with them and spread those payments out as long and as far as they like."

Read the company's full statement below. 

Dear Members,

I hope you and your loved ones had a blessed and bountiful Thanksgiving last week. Given the past couple of years of distanced celebrations due to COVID, it was a much-needed and very special time to be with family and friends in person.

As we wrap up 2021, I reflect on the many challenges that have impacted the co-op and our members. We experienced winter storm Uri in February, an unprecedented increase in wholesale power costs, and then there was Hurricane Ida - the worst storm in DEMCO history.

Since the purpose of these monthly emails is for me, the CEO and General Manager of DEMCO, to communicate important matters of the cooperative with you – the member-owners, I want to recap these issues with you now, even though I have previously addressed them throughout the year. My aim is to assure you that the DEMCO board of directors, leadership, and staff are all acutely aware of these issues, and we are united in our approach to address these issues for the benefit of our co-op members.

First, wholesale power costs for DEMCO rose 60 percent beginning this past summer. One reason for this increase is DEMCO spread the costs of Winter Storm Uri over a year to prevent a shocking increase in one month. The Louisiana Public Service Commission allowed this approach for all utilities to help all ratepayers. Paying these costs over time has increased rates by about five percent per month.

The main driver, though, of higher wholesale power costs since the summer is the extraordinary closing costs related to our power supplier permanently shutting down the Dolet Hills Power Station in Mansfield, LA. These closing costs have been pushed into the rates of all CLECO consumers, including wholesale customers like DEMCO. The Dolet Hills closing costs have increased retail rates by about 25 percent over the past six months. All of this is exacerbated by higher fuel costs over the same period.

The good news is that we are close to paying off the winter storm costs, and we will soon see the end of higher costs tied to the Dolet Hills plant closing. As a result, the monthly kilowatt-hour price from DEMCO to our members will decrease by about 25 percent beginning in early 2022.

Further good news is DEMCO negotiated, signed, and submitted new wholesale power contracts to the Louisiana Public Service Commission for review and approval. If approved, these contracts will take effect in April 2024 and will save DEMCO members $160 million over the ten-year life of the contracts.

In an economic impact study, Dr. James Richardson, Professor Emeritus of Louisiana State University, projects the economic outcomes of lower electricity prices, and the results are staggering. Because of DEMCO members spending less on electricity, they will likely spend these savings in other areas of the economy resulting in almost $270 million in increased economic transactions, which will lead to about $90 million in additional personal earnings, almost 3,000 new jobs, and over $12 million in additional state and local tax receipts.

DEMCO will boldly and aggressively advocate for the adoption of these contracts on your behalf and the economic benefit of our seven-parish service area.

Another challenge that has affected some DEMCO members over the past few months is estimated bills. The number of estimated bills increased beginning this summer in part due to our inability to obtain new meters to replace older, failing meters. Today’s electric meters utilize similar digital chips required for vehicles, and as we all know, we are experiencing a shortage of these chips.

As a result of Hurricane Ida, DEMCO also experienced damage to our automatic meter reading infrastructure. DEMCO has been working hard to resolve these problems and is deploying employees to read meters until our automated system can be fully repaired and implemented.

As DEMCO employees, we strive to do our very best every day. Our number one priority is to deliver excellent service to you – our co-op members. Each of us is committed to working hard, and even when you may not see it, we are working before and after hours to tackle problems that affect you.

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