DEMCO CEO Addresses Issues Affecting Cooperative Members

Thu, 12/02/2021

Greenwell Springs, Louisiana – DEMCO CEO & General Manager Randy Pierce recently addressed
challenges that have affected DEMCO members over the past several months.

“First, wholesale power costs for DEMCO rose 60 percent beginning this past summer,” Pierce said. “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. Spreading these costs over a year has increased rates by about five percent per month.”

Similar to how other states managed the extraordinary energy costs caused by the winter storm, the Louisiana
Public Service Commission encouraged all state utilities to spread costs over time to help all ratepayers.

“The main driver, though, of higher wholesale power costs since the summer are 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,” said Pierce. “The Dolet Hills closing costs have increased retail rates to our members by about 25
percent over the past six months. All of this is exacerbated by higher fuel costs over the same period.”

Pierce said that though this has led to higher electricity costs, the good news is that DEMCO is close to paying
off the winter storm costs and 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,” Pierce says.

Further good news is DEMCO has negotiated, signed and submitted new wholesale power contracts to the
Louisiana Public Service Commission (LPSC) 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.” Pierce emphasized.
“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.”

“Over the next several months, DEMCO will boldly and aggressively advocate for adoption of these contracts
on your behalf and for the economic benefit of our seven-parish service area,” Pierce said.
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,” Pierce said. “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. Our members will begin to see improvement immediately.”