Manager’s Message – August 2023

A Letter to the Members

Dear Members:

The 2023 annual meeting is scheduled for 6:30 p.m. Thursday, September 7 at the Vinton Grange Hall. Additionally, we will broadcast the meeting via our YouTube channel. To join the meeting, visit our website and click the link in the banner at the top of the page or watch via YouTube.

If you are not attending in person, we encourage members to send questions in advance by email us or by the form included in your voting packet. We will also take questions through the chat function during the meeting. The year 2022 was a challenging but produc- tive year for Plumas-Sierra Rural Electric Cooperative and Plumas-Sierra Telecommunications.

The issue impacting the cooperative the most in 2022 was the incredible increase in the cost of wholesale power and natural gas during 2022 as compared to 2021. It was a perfect storm for PSREC, as the 2021 to 2022 drought in California greatly reduced how much hydropower the cooperative received at the same time the Russian invasion of Ukraine spiked natural gas prices throughout the United States.

Natural gas prices set the cost of wholesale power in California and the West, especially in dry years. High natural gas prices also affect our operations of the High Sierra Co-Generation plant. Further compounding power supply was the overall sup- ply of power in California, with multiple months where the supply was right at the limit, which drove prices up for August, September and October.

Lastly, there was a massive spike in the price of natural gas and wholesale electricity in December 2022 and January 2023 that drove both natural gas and power prices to 1,000% or more of normal. This led to significant losses to the cooperative we have reported on in our financial statements. All this was on top of the increase in PG&E’s transmission rates—now amongst the highest in the nation—and the impact of the closure of CCC prison.

Per the terms of our mort- gage with the USDA Rural Utility Service, we must meet financial ratios 2 out of every three years. Having missed our 2022 ratios by quite a bit, we must collect enough revenue to meet our ratios in 2023 and 2024. We increased our base rates in November and then added a wholesale power cost adjustment of 2 cents per kilowatt-hour on the January bill, and then an additional 2 cents on the February bill for a total of 4 cents per kWh. We use the WPCA for temporary rate increases.

There is some good news in 2023. We are having a better year with our power supply. Prices for natural gas, and therefore the electricity market, have started to drop closer to 2021 levels. In addition, it’s a good hydropower year, which will help us recover from the losses from last year.

As of July’s billing that goes out July 31, we reduced the WPCA by 25%. It is now down to 3 cents per kWh. Our goal is to reduce the WPCA further at year’s end, depending on wholesale power costs and our ability to restore our financial position to where it was before 2022.

PSREC continues to improve system reliability and response times through its supervisory control and data acquisition system. We continued increased vegetation management and the removal of hazard trees on the system to improve reliability and fire safety. We appreciate the increased cooperation from members on this key reliability.

Sincerely,

Bob Marshall
General Manager