NOVEC seeks to modify wholesale power contract to access competitive market

On January 5, 2006, the Northern Virginia Electric Cooperative (NOVEC) asked the Federal Energy Regulatory Commission (FERC) to modify its wholesale power supply contract with Old Dominion Electric Cooperative (ODEC) to allow NOVEC to obtain new power supply from competitive suppliers. As part of the request, NOVEC reaffirmed its commitment to continue paying its share of existing ODEC power resources.

“We believe our request is a solution that brings balance to all parties involved. It allows NOVEC to shop for the lowest, most competitively-priced power to meet the growing needs of our customers and it provides financial stability to ODEC and our sister-cooperatives, because NOVEC will continue to pay for its share of ODEC’s existing resources,” said Stan Feuerberg, NOVEC President and CEO. “We think it’s a win-win solution.”

NOVEC’s power supply contract with ODEC was signed in 1983, before Congress enacted the Energy Policy Act of 1992 and before FERC mandated dramatic changes in the industry beginning in 1996 by issuing Order No. 888 under the authority given it by Congress. The 1996 federal order mandated dramatic changes in the electric utility industry to promote competition and allow utilities access to transmission in order to obtain lower cost power for consumers. The contract, if not modified by FERC, locks NOVEC and its customers into an agreement to pay for any power resources that ODEC acquires until 2028.

“The electric utility industry has undergone tremendous change in the last 14 years,” said Feuerberg. “Our 1983 contract with ODEC is an ‘old world’ contract that would deny the benefits of competition to our customers for another 22 years and force us to participate in new power supply investments that we do not think are in the best interest of our consumers.”

NOVEC is a not-for-profit, consumer-owned electric distribution cooperative. NOVEC provides electric service to more than 130,000 homes and businesses in six counties of Northern Virginia, most of which are in Fairfax, Prince William and Loudoun counties, among the fastest growing in the country. NOVEC’s mission is to provide its member retail customers with reliable power supply at the lowest cost reasonably possible.

NOVEC is one of the largest cooperatives in the nation, and largest of the 12 distribution cooperatives that own ODEC. NOVEC accounts for nearly 30 percent of ODEC’s member load and member revenues.

“As a consumer-owned cooperative, we take our mission to provide lowest-cost power very seriously. Our wholesale power billings from ODEC currently comprise about 76 percent of NOVEC’s total operating costs. Clearly, this is unacceptable,” said Feuerberg. “The cooperative business model is consumer-focused and will work well in the new competitive environment, but we must be allowed access to the competitive market.”