I am a huge fan of the Seinfeld Show. I like it because it takes everyday things, blows them out of proportion and makes them humorous – at times hilarious. It may not be a ‘show about nothing,’ but it is a show about the little things of everyday life that most people don’t notice.

            One of my favorite Seinfeld episodes has Kramer coaching Jerry on how to get money for his stereo by tearing it up, insuring it through the post office, shipping it to himself and making an insurance claim for the loss. When Jerry questions Kramer about who will pay for the stereo, he responds, “…they will write it off.” After a discussion of what “writing it off” means, Jerry accuses Kramer, “… you don’t even know what a write off is, do you!”

            I can’t help but think of that episode and dialogue whenever I hear the debate about government incentives and subsidies, especially subsidies and incentives for green energy or green power. You hear a lot about green power and how it will reduce the amount of carbon dioxide released into the atmosphere, thereby mitigating global warming, reducing our dependency on foreign oil, creating a new economy based on green jobs, lowering our energy costs and generally improving our standard of living.

You also hear a lot about the need to provide government incentives to “jump start” the green economy. Just last month, U.S. Secretary of Energy, Steven Chu, and the President’s Council of Advisors on Science and Technology (PCAST) – how did we ever live without acronyms? – urged a substantial increase in the U.S. government’s investment in green energy-related research and development of $16 billion per year so we can maintain pace with China in energy innovation. That investment is in addition to the billions of dollars in government subsidies and incentives the ethanol program, the wind power program, the solar energy program and any other program that claims to be green already gets from the government.

            Advocates of green energy encourage even more subsidies and incentives for green energy than those proposed by Secretary Chu and PCAST. They argue that without subsidies and incentives, renewable and green power projects cannot develop, thrive or expand. Why would that be? The answer is that almost all renewable or green energy costs more, and for most green energy substantially more than conventional fossil fired energy. Green energy is simply not cost competitive, and those green energy developers would go bankrupt without government subsidies and incentives. And they will not be competitive until the price of conventional fossil energy approximately doubles from its current levels.

            Also, government subsidies and incentives allow the government to pick winners and losers. If they like a certain type of technology or if the developer of a project was a rather large political contributor, a technology or project may be favored.

But didn’t government subsidies and incentives help promote nuclear power and combustion turbine technology? They did, but now that the research and development is complete, those technologies are run by the private sector with private investment. But what research is being done on wind and solar? They just need the subsidies and incentives to stay afloat.  

            Finally, who pays for the government subsidies and incentives for renewable or green energy projects? If they are government subsidies, of course the government does.

This is where the Seinfeld episode comes into play: Do you know what a government subsidy or incentive is? The government takes your money from taxes – and we all pay taxes, whether income, property or sales taxes – and decides who gets the free government handout of subsidies and incentives.

            So in the end, the government takes your money and gives it to developers of solar projects, wind farms and ethanol projects, which will increase your cost of electricity. So you pay at least twice. You pay the higher cost of power from green sources and you also pay taxes for the government to subsidize and incentivize those green projects. If you didn’t know that you paid, you are like Kramer, you don’t really know what a government subsidy or incentive is.

Gary Smith, President & CEO

Last December, I wrote about Gus Mayer, my loyal bagel (half beagle, half basset), and his carbon footprint as described in the book, Time to Eat the Dog? A Guide to Sustainable Living. A year later, Gus Mayer and I are again sitting here talking about the day’s issues.

Gus Mayer is a fine companion and a patient listener. Today, I was lecturing him on the elections and the changes that are likely – in particular, climate change and renewable energy standards (RES). He was more interested in what we would have for lunch, but was still concerned that climate change will result in him being eaten, or possibly more disturbing, a change in his diet.

With an overwhelming Republican victory in the U.S. House, conventional wisdom dictates that cap and trade legislation to tax and limit carbon dioxide emissions will not pass for at least two years. However, with the change of power in Congress, progressives (they don’t like to be called liberals) have shifted their focus and plan to use EPA regulation and RES to increase the price of energy. Their goals remain the same: increase the price of energy, reduce energy usage and thereby reduce carbon dioxide emissions. The results will be the same as well: increase electricity costs and lose millions of U.S. jobs.

 Renewable energy is popular among Americans, and the progressives give great weight to that support. But that support is limited. The same polls that show support for a national RES also show that 57 percent of Americans are opposed to paying even 5 percent more for electricity from renewable resources. That limitation in support is where the progressives’ plans meet hard economic fact.

The Energy Information Administration (EIA) says that renewable energy costs at least twice as much as traditional fossil-fired generation. For example, EIA estimates the cost per megawatt hour from conventional coal resources is $78.10, but the cost of onshore wind is $149.30; the cost of off-shore wind is $191.10; the cost of thermal solar is $256.60; and the cost of solar photovoltaic is $396.10. All those costs are without the benefit of federal and state government subsidies, but coal and natural gas generation receive no subsidies, either. Additionally, natural gas generation will be equal to or cheaper than the EIA’s quote on conventional coal if natural gas costs remain in the $4 per MBTU range.

If the federal government mandates that 22 percent of electricity come from renewable resources, energy costs will increase substantially. A Heritage Foundation analysis predicted household electricity prices would increase 36 percent, industrial electricity prices would increase 60 percent, national gross domestic product would decline $5.2 trillion between 2012 and 2035, and the U.S. would lose more than 1,000,000 jobs.

If renewable energy was cost-competitive, there would be no need for a RES mandate. As the most critical input to our economy, forcing higher electricity costs will increase the cost of production. However, as opposed to a normal tax, the government will obtain no revenue from that increase. The costs go up and only the renewable energy providers – electric utilities – will benefit. In the end, our economy will suffer when industrial production is shifted off-shore where renewable mandates are not in force. We will gain nothing from the shift, and the progressives’ efforts to save the world will again be in vain.

After a while, Gus Mayer lost interest and went to sleep in the sun, dreaming of juicy cheeseburgers. When I woke him up, he wanted to know if there will be a requirement that a minimum amount of food come from the magic windows at fast food restaurants. They are his favorites, and he would hate for renewable mandates to put them out of business.

Those of you that follow my articles are familiar with my opinions concerning climate change, greenhouse gases (GHG) and the effects of anthropogenic carbon dioxide emissions. While I don’t know for certain the danger (or lack thereof) of GHG emissions in the atmosphere, I think it is ill-advised to ruin the country’s economy by dramatically increasing energy costs to reduce GHG emissions. I am absolutely convinced we’ll ruin our economy and lose manufacturing jobs to other countries due to an increase in the cost of goods and services as a result of artificially elevating energy prices to reduce GHG emissions.

However, if we want to provide for our energy needs, including electricity, with less carbon dioxide emissions, nuclear power is our best option. It is carbon free, or at least we think of it as a GHG-emission-free source of generation. However, the Environmental Protection Agency (EPA) – or at least EPA Region IV – says that is not so.

In comments to the Nuclear Regulatory Commission’s Draft Environmental Impact Statement (DEIS) on the Virgil Summer Nuclear Station in South Carolina, the EPA filed comments that cast doubt on the Obama administration’s apparent support of nuclear power and questions the NRC’s determination that the carbon profile of nuclear projects is a “small fraction” of fossil fuel plants. In its comments, EPA Region IV takes issue with the NRC’s statement that nuclear power results in significantly lower carbon dioxide emissions than coal or natural gas-fired electric generation. EPA states that NRC’s evaluation does not convey an accurate picture of the full life-cycle of carbon dioxide emissions of the nuclear generation process.

EPA concludes that the carbon footprint of uranium enrichment is comparable to the carbon footprint of two coal-fired generation plants in South Carolina. Finally, EPA Region IV assigns an EC2 rating for the Summer Nuclear Project, meaning it has identified environmental impacts that should be avoided.

How absurd is the EPA’s conclusion that the life-cycle carbon dioxide footprint of nuclear generation is comparable to the carbon dioxide emissions of coal-fired generation? That unique position exhibits the true agenda of EPA and other environmentalists, which is to dramatically change your lifestyle.

If you decided to change the energy usage in your lifestyle, what would you change? Would you choose to heat your house less when it is cold? How about less air conditioning when it is hot? Can you watch less high definition television? Are you willing to use your computers less? What about letting your cell phone batteries go down? Less video games for the kids? Hang your clothes out to dry instead of running the dryer? What about generation to power the electric automobiles everyone talks about? 

If the EPA objects to the construction of coal and natural gas-fired generation because of carbon dioxide emissions and also objects to nuclear generation, where will new electric generation come from to meet your load growth? The answer is, “there is nothing” that meets that challenge. Not wind and certainly not solar. The only solution is to change your lifestyle and use less electricity.

We can use electricity more wisely in some instances, but to significantly reduce electric usage – even with smart grids and smart appliances – is highly unlikely. What would you do to reduce your electric usage, especially if the price doubles or triples? With this Administration, it might be good to start thinking about it.

Gary Smith, President & CEO

The Alabama Living schedule requires articles to be written about a month ahead of time. I started writing this one on August 18^th.

For many years, August 18^th was no more special than any other day of the year.

That all changed 30 years ago when my oldest daughter, Ashley, was born. For those of you that have children, you know both the joy and the fear the birth of your first child brings. A first child is a very special occasion. It changes your life and requires you to readjust your priorities and focus on someone and their needs that you have not considered before.

            A special and much different bond is formed with your child. You start thinking about your life in broader concepts than before. You think more about the events of the world and your life and the effect they could have on the newest addition to your life. You share dreams and expectations with your children and have a renewed sense of hope by looking at the world through their eyes as well as your own.

             Raising a first child is an alien experience. You are not accustomed to taking care of another, especially one as small and helpless as your child.  That was the case with Ashley, who was pre-term and had to remain in the hospital a week after her mother was discharged. After 30 years, I still remember the fear and confusion about her condition and how she would fare in the hospital without us. Also, there were the concerns about education, social skills, jobs, and the rest of her life. What traits of her parents or grandparents would she assume? Would she be successful? Would she be happy?

            Despite my concerns, Ashley has turned out better than I ever expected or could have hoped. She is a beautiful young lady. She is very bright and personable. She makes friends wherever she goes. She is successful, a leading seller of automobile financing for her company. She is happily married and lives in her dream home in Birmingham. She and my son-in law, Scott, are attempting to start the cycle of life over with their first child.

            Because of Ashley, August 18^th holds some very good memories for me.

            August 18^th is special for another reason, this one not as pleasant. A year ago, my father passed away after a short fight with Alzheimer’s Disease.

            Of course, Daddy’s death was a shock. You don’t think about your parents’ death until it happens, and no one can adequately prepare you for the emotion. Daddy and I were not particularly close. He was not particularly close to anyone. I didn’t understand him and what he wanted from life, and I doubt if he understood me. Also, it didn’t appear that he put much time or effort into understanding me or what I wanted from life.

            That doesn’t mean I didn’t feel a significant loss when he died. After all, he was my Dad and the only one I had or will ever have. If we really needed help, he would usually offer help or support. Although distant and emotionally detached, he appeared to care in his own unique way.

            I think about him more now than I did when he was alive. Which of his traits have I inherited? Did he have goals for his life? Did he achieve them? I have counseled our mother that as far I as knew he did only what he wanted to do. But given his choices, was he happy with his life and what he left behind?

            Within the inevitable cycle of life, one life starts and another ends. Birth leads to death and parents lead to children. August 18^th is an important date in the cycle for me, one that will never me allow me to forget. It is the date that will always remind me of the joy and hope of a life starting with so much hope and also a date that will always remind me of the sorrow of a life lost and with it, its hope.

            I hope you all enjoy your parents and your children to the fullest while you have the opportunity.

Gary Smith is President & CEO of PowerSouth Energy Cooperative.

Random Comments on Global Warming, Climate Change, and Cap and Trade

             Those of you that follow my columns know that I have offered my opinions on global warming, climate change and green jobs a number of times on these pages. This month, I offer statements and opinions of others on the subject.

            Most of you would expect me to quote Dr. John Christie, Dr. Richard Lindzen or other deniers to the warming of the earth or the harm of any climate change brought on by the anthropogenic emission of carbon dioxide. This month, I offer you something different – the statements, opinions and predictions of those who strongly support of the concept of reducing carbon dioxide emissions.

“I believe we must pass Cap and Trade because we see it as a source of revenue.” – U.S. Speaker of the U.S. House of Representatives, Nancy Pelosi (San Francisco Chronicle, January 22, 2009).

 “Cap and Trade is the significant revenue generating proposal of our time.” – Maryland Democratic U.S. Senator Benjamin Cardin (Washington Post, April 3, 2009).

 “Nobody in this country realizes that Cap and Trade is a tax, and it is a great big one.” – Michigan Democratic U.S. Congressman John Dingel (Politico Magazine, April 27, 2009).

 “Whether you call it a tax or not, everyone agrees that Cap and Trade is going to increase the cost to the consumer.” – New York Democratic U.S. Congressman Charles Rangel (Roll Call, May 2009)

 “The greatest political task of our time is not raising the living standards of the poorest, but rather narrowing the rich-poor gap.” – Rupert Read, Head of United Kingdom’s Green Party (Rupert Read’s Thoughts of the Day, October 15, 2009).

 “The prosperous lifestyles of the people in the West simply must be curtailed. Radical taxes must be imposed and automobile use must be curbed by the state or some other authority.” – Rajendra Pachauri, President of U.N. Intergovernmental Panel on Climate Change (The Observer, November 29, 2009).

 “We must get to a system where an electric company will be able to hold back some of the power so that maybe your air conditioner won’t operate at its peak. You’ll still be able to cool your house, but it will be a savings to the consumer.” – U.S. Energy and Climate Czar, Carol Browner (US News & World Report, March 9, 2009).

 “We have to figure out how to boost the cost of gasoline to the levels in Europe.” (At the time of the quote, the price of gasoline in Europe was an average equivalent of $8 per gallon and in places an equivalent of $11 per gallon) – U.S. Secretary of Energy, Steven Chu (Wall Street Journal, December 12, 2008).

 “We can’t drive our SUVs and eat as much as we want and keep our homes at 72 degrees at all times…and then just expect that other countries are going to say ok. That’s not leadership. That’s not going to happen.” – President Barack Obama (AFP, May 16, 2008).

 “Under my plan for a Cap and Trade System, electricity rates would necessarily skyrocket, so if somebody wants to build a coal plant they can – it is just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted. Regardless of what I say about whether coal is good or bad, because I am capping greenhouse gases, coal power plants, you know, natural gas plants, you name it, whatever the plant is, whatever the industry is, they would have to retrofit their operations. This will raise billions of dollars.” – President Barack Obama (San Francisco Chronicle, January 8, 2008).

             Of course, the predictions of a collapse of the U. S. economy by some economists are sobering, as are the predictions by climate scientists that reduction in anthropogenic carbon dioxide emissions will have no effect on global temperatures or the climate. However, the plans and predictions of those that I have quoted above and others I have not on what the world will look like after they get through with their climate change Cap and Trade programs is more sobering. These leaders don’t predict a good future for you if you like to drive SUVs or trucks, keep your house comfortable, use electricity when you like, afford gasoline, eat as much want or just enjoy your present lifestyle.

            I told Gus Mayer – my dog who appeared in an earlier article about climate change – about these predictions and he was still worried about eating all the red meat he can get. He is still concerned red meat will be outlawed and he will go hungry. Maybe we should all be as concerned about where our next meal and our future as Gus Mayer.

Gary Smith, President and CEO, PowerSouth Energy Cooperative

            If you watch the Discovery Channel, public television or read any newspaper, you have been presented the benefits of green or renewable energy. You have heard that if we reduce or end our dependence on fossil fuels (coal, gasoline and natural gas), we will breathe easier, stop global warming and revolutionize our economy with green jobs.

Green energy has great emotional and political appeal. But as Robert Bryce points out in his April 25, 2010, article in the Washington Post, there are myths surrounding green energy. I have summarized some of Mr. Bryce’s myths.

 

Solar and Wind Power Are Not As Green as Advertised

            Solar and wind require huge amounts of land to produce relatively small amounts of energy. Wind turbines require 20 times the land to produce the same amount of energy as natural gas. Solar generation requires eight times as much land as a nuclear plant to produce the same amount of energy. A report produced last year by The Nature Conservancy criticizes the energy sprawl of wind and solar resources and the thousands of miles of high voltage transmission lines required to move the green energy to population centers as a blight on our natural areas.

            Wind and solar don’t necessarily decrease carbon dioxide emissions either. Denmark has more than doubled its production of wind energy between 1999 and 2007; however, its carbon dioxide emissions have not declined. Denmark’s relatively stable carbon dioxide emissions may be as much the result of zero-population growth and exorbitant energy taxes as the increase in wind power production.

 

Green Energy Will Produce Green Jobs

            U.S. wind turbine and solar panel manufacturers face the same challenges as other U.S. manufacturers – high labor costs. If American companies look to expand green manufacturing jobs, they will have to compete with labor costs in China and India. Also, China controls the market for neodymium, a critical element in production of magnets in wind turbines, which gives them an additional advantage in turbine production.

            China has indicated its willingness to invest in solar panel production to gain market share. The strategy has worked, and China’s share of the solar panel market has expanded from 7 percent in 2005 to 25 percent in 2009.

            But if we use subsidies and renewable mandates to induce growth of green energy won’t we create manufacturing efficiencies that will produce green jobs? Consider the claims of the subsidy-dependent corn ethanol industry. Growth Energy, an industry lobby, predicted that increasing the percentage of corn-based ethanol would create 136,000 jobs. However an analysis by the Environmental Working Group reports that no more than 27,000 jobs have actually been created by the mandated use of corn ethanol, and each job cost taxpayers approximately $446,000. Green jobs sure, but at what cost?

 

The United States Lags Behind Other Developed Countries in Going Green

            The same media that advocates a wholesale movement to green energy also indicts the United States for our reluctance to embrace green energy. Those indictments are unfounded.

            The United States has improved energy efficiency as much as or more than any developed country. The Energy Information Administration reports that United States per capita energy consumption fell by 2.5 percent from 1980 to 2006, more than any developed country other than Switzerland and Demark. Also, the United States has reduced its carbon emissions per $1 of GDP, more than any developed country.

            The United States will continue to improve its environmental profile by simply allowing engineers and entrepreneurs to continue to make products that are faster, cheaper and more efficient than the ones they made the year before. Mandated use of green energy will not effectively accelerate that process.

            Things are not always as they appear. Usually they are never as good or bad as advertised. Green energy will not save our economy or our environment. It can produce some marginal benefits, but it will not be an energy salvation.

            Robert Bryce is a senior fellow at the Manhattan Institute. His fourth book, “Power Hungry:  The Myths of Green Energy and the Real Fuels of the Future,” was released in April 2010.

Electric usage has grown rather remarkably over the past two decades. Even with the economic difficulties of the recent Great Recession, electric usage in the South has continued, although at a slower rate than before. For instance, PowerSouth’s distribution members continue grow at annual rates of about 1.5 percent as compared to 2.5 to 3 percent before the recession.

Why is electric growth important to us or to you, for that matter? Electric generation plants have limited capacity or a maximum output. Once a utility’s generation maximum is reached, additional generation must be secured. That additional generation may be built or purchased from another utility if it is available and cost-effective.

The problem with building new generation is that it costs more than the generation resources already in place. Pulverized coal generation plants built in the early 1980’s cost about $1,500 per kilowatt, compared to pulverized coal generation that costs about twice that amount if constructed now. That means a higher cost of electricity when new generation has to be built.

Growth is inevitable. Steven Chu, Secretary of Energy, recently predicted in the Wall Street Journal that electric usage will increase by 77 percent by 2020. So what new generation resources best meet a utility’s growth profile and provides the lowest cost of electricity? If the future electric generation is to be carbon constrained, a revival of nuclear generation looks promising.

In support of nuclear generation, Secretary Chu announced that $8 billion in conditional government loan guarantees for new nuclear plants will help provide enough electricity to serve 6 million American homes. Additionally, Secretary Chu announced that President Obama had requested $39 million to help develop small modular reactors (SMRs) generators that are better sized for system growth than the 1,000 megawatt traditional nuclear generators.

Secretary Chu also stated, “These efforts are restarting the nuclear power industry in the U.S. But to truly promote nuclear power and other forms of carbon-free electricity, we need long-term incentives. The single most effective step we could take is to put a price on carbon by passing comprehensive energy and climate legislation. Requiring gradual reduction in carbon emissions will make clean energy profitable and will fuel investment in nuclear power.”      

What does all that mean? It could mean the Administration has finally acknowledged that we cannot meet future electric growth and reduce carbon emissions without development of new nuclear generation. As a country, we are finally ready to put fears of nuclear power behind us and catch up with France and China on nuclear development. It may also mean the Administration is willing to promote additional nuclear generation if it can tax carbon-emitting generation.

Whatever the motivation, new generation — including nuclear — will increase your cost of electricity. If the Administration also taxes embedded generation resources, the cost of your electricity will increase even more.

Unfortunately, it also means the Administration fails to recognize that the American people want affordable electric power, and American industry needs affordable energy for its products to compete in a global economy and provide the jobs Americans need.

Over the last several months, many school systems, development boards and chambers of commerce have sponsored career fairs. You may have read about such a fair in your local newspaper or attended one in your community. At PowerSouth, we embrace the opportunity to participate in getting the word out about our cooperative, our service area and careers in the utility industry.

 When job applicants research PowerSouth, many of our resources highlight our vision to build member relationships, to provide reliable, competitively priced wholesale power, and to promote development of the communities we serve. Resources offer information on our distribution members, generation and transmission assets, or our role within the commerce of Alabama and northwest Florida. However, our most valuable asset is a living and breathing one – our people.

 More than 600 men and women work for PowerSouth at nine locations in Alabama and Florida. Without their hard work and dedication to providing energy to meet the needs of our distribution members, nearly 1 million consumers would be without power. We know and understand what our employees bring to the cooperative equation, and PowerSouth emphasizes the importance of our employees first and foremost with our number one core value – safety. Without it, our employees are at risk, and that is simply unacceptable.

 All our corporate values are important, but without safety, reliability and affordability don’t matter much. PowerSouth employees continue to set the standard for safety excellence in our industry. We boast an impressive safety record, with a Recordable Incident Rate (RIR) of 1.4 for 2009, compared to a national average of 3.6. The company’s Days Away, Restricted or Transferred (DART) rate is 0.0, compared to a national average of 1.8. Collectively, our employees worked 1,140,939 hours in 2009 without a lost time injury.

 While we are all proud of our safety record, we are even more pleased about the fact our employees go home uninjured to their families. Together, we want to lead PowerSouth and the communities we serve into a prosperous future. To do that, we need all 600 employees to return to work each morning, ready to provide energy another day.

 Next month, electric utilities all over the country will promote safety as part of National Electrical Safety Month. The purpose of this year’s campaign is to help consumers take an active roll in identifying home electrical hazards and in safeguarding their families from the dangers these hazards pose. You are an extended part of the PowerSouth Energy family, and electrical safety matters whether you are climbing an electrical pole for regular maintenance or watching television with the kids.

 When the power is on and our day-to-day devices are working like they should, electricity is almost an unknown – an intangible that is too often forgotten. However, it is PowerSouth Energy Cooperative and your local electric cooperative or municipality’s objective to make sure that while you receive your electricity efficiently and at the lowest possible cost, you also are offered an assurance we will use safety measures to educate everyone about hidden electrical hazards.

 Be on the lookout for additional information that will keep you, your family, your home and business safe. Meanwhile, we will work hard to achieve another year of safety milestones. Won’t you join us?

Gary Smith

President & CEO

Lowman Power Plant Operator

I have the opportunity to give talks to a number of civic clubs and community groups about PowerSouth and the electric utility industry. In those talks, I frequently ask the audience where electricity comes from. One of the more humorous responses I have received is ‘from the wall.’

            Most people have a better understanding of electricity than that, but not many understand the complexity of providing reliable electric service on a real-time basis. Many people do not know that electricity cannot be stored and must be generated at the time it is used. Simply said, every time a light is turned on or a meal is cooked, an electric generator somewhere must immediately run harder to produce that incremental amount of electricity.

            Most people also don’t know that electric load – or the amount of electricity used at any particular time – can greatly fluctuate from time to time and from season to season. For instance, high electric loads are expected when temperatures reach 100 degrees or on a morning when temperatures are in the teens. Traditionally, electric loads during the spring and fall are less than half those of winter and summer peak seasons.

            As the exclusive wholesale supplier for 20 retail distribution members, PowerSouth must have sufficient generation capacity – power plants or firm generation contracts – to serve our expected peak load. Otherwise, the electric load would exceed the available capacity, and our customers would experience blackouts or brownouts. To prevent service interruptions, we prepare detailed load forecasts and power supply plans to build or contract sufficient electric generation to meet our member distributors’ power requirements at all times at the lowest possible cost.

            During the recession and economic downturn of the past couple of years, our member distributors’ loads have declined about 8 percent from our load forecasts. We adjusted our load forecast in 2009 to recognize the lower demands for electricity and projected a 2010 winter peak – we are a winter peaking system – of 2,100 megawatts (MWs).

On Monday morning, Jan. 11, 2010, in the midst of one of the longest cold streaks in south Alabama history, our member distributors had loads totaling 2,384 MWs, an increase of 13.5 percent. Our load forecast did not predict we would reach load levels of that magnitude for another 6 to 7 years. We were further challenged in meeting the unexpectedly high peak because of construction at our McIntosh Plant that rendered our McIntosh Plant out of service. The high peak loads and plant outage challenged our employees to secure sufficient generation and keep our transmission lines and substations operational.

As you know – because your heat stayed on to keep your homes warm – our employees did a remarkable job of keeping all our generators running, contracting for additional generation capacity from other utilities, and maintaining our transmission lines and substations to provide reliable electric service. Our distribution members’ employees also did a remarkable job of working outside in the extreme weather to keep the power on and restoring power in a short period of time in those instances when outages occurred.

The job of keeping the power on during freezing temperatures is much harder than it looks because electricity doesn’t just ‘come out of the wall.’ There is a very complex interconnected network of electric generators, transmission lines, electric substations and distribution systems that all must work together to keep your lights on and your homes warm. I am very proud of the way PowerSouth employees and our distribution members’ employees performed during the extreme cold weather and to the unexpected peak loads.

Gary Smith, President and CEO

PowerSouth Energy Cooperative

By Gary Smith, President & CEO

            Bruce Dillingham was one of the best football players in the history of Corinth High School in Corinth, Mississippi. It is rumored – I have not confirmed it nor tried it, for that matter – that Bruce carried the ball on every offensive play for the Warriors in a game his senior season. Bruce went on to play football at Ole Miss in the late 1960’s, where he was an All-SEC safety.

            After his graduation from Ole Miss, Bruce returned to Corinth where he was an assistant football and baseball coach and taught civics and government. I received my first initiation to government as a senior at Corinth High School under Coach Dillingham’s guidance.

            As a government teacher, Coach Dillingham was a very good football coach. However, we learned some things about government that I still remember. For instance, we learned that the United States was not governed under a true democracy, but as a democratic republic where the people elect public officials that represent the peoples’ interests in passing and administering laws.

            Coach Dillingham taught that the people would elect their representatives to Congress, who would work with other congressional representatives to pass laws that the majority of the people would approve of. The implication was that all 435 representatives and senators would be involved in the law-making process and that the laws would apply to all citizens equally.

            After watching the Waxman-Markey Bill go through the House and the Senate pass the healthcare bill, it became obvious that Coach Dillingham did not completely understand the process. Not all the 435 representatives and senators are involved in the process. In fact, it appears that only a few are involved, and those that are receive extremely lucrative benefits for their participation.

            Coach Dillingham didn’t explain political payoffs to us. I doubt if he understood the concept or that it was even covered in the textbooks. But political payoffs and special deals have always been with us, and they are working and paying better than ever today.

            For a vote in favor of healthcare, Florida residents will not lose Medicare Advantage benefits that other states’ residents will lose at a cost of $3 to $5 billion. Senator Mary Landrieu obtained $300 million in Medicare subsidies for Louisiana as a state recovering from a medical disaster – that disaster being Hurricane Katrina. Massachusetts and Vermont will receive $500 million and $300 million, respectively, in higher Medicare reimbursements. Montana, North Dakota, South Dakota and Wyoming obtained higher Medicare payments for frontier hospitals. Senator Christopher Dodd obtained $100 million for the University of Connecticut’s Medical Center. Finally, for holding the final vote needed for passage, Senator Ben Nelson was able to secure exemption for the insurance fees for Nebraska insurance companies and federal payment for new Medicare coverage for Nebraskans at a cost of $100 million. Of course, those of us living in states whose representatives and senators voted against the healthcare bill – like Alabama – get no special deals.

            These special provisions of course mean that healthcare will not apply in the same manner to all Americans. Coach Dillingham certainly never taught us this principle back in government class. I liked Coach Dillingham’s version better.

            For those of you that are interested, Bruce continues to reside in Corinth, Mississippi, with his wife, Sally. After a short teaching and coaching career, Bruce became a successful banker and, later, a property appraiser. He serves on the Alcorn County Electric Power Association Board of Trustees.