Employees of Arrowhead Electric Cooperative Inc. (AECI) outnumbered members at a public meeting at the Lutsen office to discuss the budget and a fiber optic stimulus grant Monday, March 22, 2010.
Executive Director Don Stead gave a Powerpoint presentation on how rates are determined. Each year the cooperative sets its financial targets, forecasts its expenses, and determines how much revenue it will need to meet its targets and keep its margins of working capital and debt where they want them to be. Theyset rates to cover their costs, Stead said.
Employee Jeannie Muntean said that 61% of the cooperative’s income goes to buying power from Great River Energy. Two years ago, the cost of power went up 28% over the course of 12 months.
Electric usage in Cook County has increased considerably since 2001, Stead said, partly because of an increase in the number of people in the county. In 2001, Arrowhead Electric customers used over six million kilowatt hours of energy. In 2009, they used just under 10 million.
Tom Dwyer wondered how he could reduce his electric bill. He pointed out that energy systems they were encouraged to use several years ago in order to lower energy use and save money are not saving money anymore. Stead recommended that he invest in a different home heating system, such as a hot water tank that could heat water during off-peak hours.
Bob LaMettry wondered why the seven AECI board members receive $325 a month for attending a threehour meeting. They do more than attend a meeting, Dwyer said. Stead said that they each do about two to two-and-a-half days of work each month for the cooperative.
Three seats are up for election this year.
Stead answered questions about AECI’s stimulus grant application with Pulse Broadband for fiber optic infrastructure throughout the county. Pulse has a patent for lines that have fewer fiber strands than other systems, resulting in thinner, lighter cables that won’t build up as much ice as thicker cables. Because of this, the poles don’t have to be as strong. Thecost savings from lighter cables and smaller poles are significant, Stead said.
Fewer strands mean less capacity, Stead said, but as few as two strands could meet the entire state’s telecommunications needs.
For the proposed fiber optic system to be financially sound, 2,000 of the county’s households would need to get on board. While the U.S. Census Bureau estimated the county’s 2008 population at just 5,437, seasonal residences (including rental units such as Caribou Highlands) bring the number of households to 5,000, according to Stead. He said 85% of those households are currently purchasing Internet services. Tom Dwyer, formerly on the Boreal Access board of directors, said Boreal had over 1,600 accounts at one point.
The fiber optic system would require Arrowhead Electric to have an extra truck and would support one more lineman job, Stead said. It would net as much as $350,000 a year, serving Grand Marais and Grand Portage as well as the rest of the county. Stead said he is anticipating no hookup fees.
Pulse would install equipment on Arrowhead Electric’s poles that would enable “smart grid technology” – home appliances could be turned on and off by the grid depending on the system’s current energy demands. Other telecommunication companies would have the right to lease pole space but would need to obtain easements from landowners, Stead said, which would likely reduce competition significantly. Pulse would be exempt from needing easements because it could transmit electrical signals for Arrowhead Electric.
If Arrowhead Electric stands to gain only about $350,000 a year and would only employ one extra person out of the deal, Tom Dwyer asked, is the risk worth it?
Jeannie Muntean said she believes the system would make online jobs available in Cook County, enabling more people to live here and earn good livings.
“This is probably one of our better opportunities to get things done up here,” Stead answered. He pointed out that the Northeast Service Cooperative has applied for the same grant, also with the intention of installing fiber optic cable throughout Cook County, and has earned a higher score in the ranking process. Northeast Service Cooperative has been talking to AECI about what kind of agreement would be needed to keep other companies from following along behind and ruining their financial model through competition, he said.
While Stead believes fiber optic would provide a lot of opportunity to the county, he was not afraid to look at all the angles. He is an engineer at heart, he said, and the straight answer is the one he’ll give, whether it’s what people want to hear or not.
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