Louisiana PSC approves new power deals for co-ops, siding against Entergy and Cleco
October 19, 2022
On October 19, 2022 DEMCO received unanimous Louisiana Public Service Commission approval of our new 2024 wholesale power contracts with NextEra Energy Marketing and Amite Solar.
The new wholesale power contracts will go into effect in about 18 months, on April 1, 2024, after our current ten-year wholesale power supply agreement with CLECO Power expires on March 31, 2024.
The approval of these contracts will result in significant savings for DEMCO members.
As an electric distribution cooperative, DEMCO purchases power from other companies who sell wholesale power – we don’t make the electricity, we deliver it. Power supply cost is about 65% of the electric bill, so having access to competitive market prices and locking in those good rates in advance will be great for our members and the communities we serve.
Under the new contracts, estimates show that electricity rates will decrease by approximately 10-15% on average, with even higher savings possible during high-priced periods like we have experienced recently.
Dr. James Richardson, Professor Emeritus of Louisiana State University, projects that DEMCO members will save $160 million over the ten-year life of the contracts, or $16 million each year. These savings will generate nearly $500 million of economic growth in Louisiana, which will create almost 3,000 new jobs and over $12 million in tax revenues.
DEMCO will have the flexibility to benefit from the most current wholesale market resources and can lock in annual rates when market conditions are favorable, something it cannot do under the current contract.
DEMCO will be able to lock in annual rates well before the beginning of each year to reduce month-to-month power supply price fluctuations. As technology evolves and power markets change, we will be able to adapt to find the best rates for our members.
DEMCO also entered into a fixed-price 25-year solar power-purchase agreement with Amite Solar to take all of the capacity and energy from a proposed 100 MW solar facility to be constructed in Tangipahoa Parish.
Now that the contracts are certified, Amite Solar will continue moving forward with the development of the new solar facility, and in 2024 DEMCO can utilize this green, modern, low-priced energy as part of our power supply portfolio.
DEMCO followed all Commission rules and conducted a competitive request for proposal (RFP) process whereby 13 companies submitted 95 qualifying bid proposals. DEMCO selected NextEra Energy Marketing, one of the largest power suppliers in North America that serves more than 70 public power entities and has a presence in all major markets.
The contracts with NextEra will also allow DEMCO to lock in annual rates to prevent month-to-month fluctuations and offer more diverse energy types. DEMCO’s initial contract will include approximately 15% solar energy and hydro energy with options to procure additional renewables.
Lower electricity bills will not only benefit DEMCO members but our regional economy as a whole. Having to pay less for electricity will allow individuals and families to spend more on other goods and services, creating additional economic activity throughout the communities where our DEMCO members live, work and play.
For more details, please click on the links provided below.