Nelson County, Virginia
Central Virginia Electric Cooperative (CVEC) announced newly negotiated energy contracts for up to 22% of the Cooperative’s energy needs through 2025. The first contract is with Morgan Stanley Capital Group Inc. for a 14 MW block of energy delivered 24 hours per day, 7 days per week for the calendar years of 2020 and 2021. The second contract is with American Municipal Power and it will deliver 21 MW of electricity in every hour of the years 2022 through 2025.
CVEC purchases energy for the future based on a hedging strategy intended to stabilize rates and avoid extreme jumps in energy prices. “The cost of the electricity itself makes up about two thirds of our members bills,” says Gary Wood, president and CEO of CVEC. “It is important for us to manage those purchases to the best of our ability to deliver a cost effective service to our members.”
Unlike most electric distribution cooperatives, CVEC purchases energy independently as part of a continuous process, choosing to diversify with a wholesale “power portfolio” strategy, buying blocks of energy from more than twenty different sources rather than one “all-requirements” contract from a single supplier.
“Last June, CVEC made the conversion to a purchased power portfolio, reducing overall wholesale costs by almost a penny per kilowatt-hour and offsetting rising operational costs during a period of slow to no load growth,” offered CVEC Senior V.P. and COO Bruce Maurhoff. “Those savings, combined with the newly negotiated baseload energy blocks, place CVEC in a favorable position to power our members’ comfort and convenience needs, while keeping rates steady, well into the future.”
COO Maurhoff added, “The timing was right for us to access the long term market. Prices right now are attractive and relatively flat in the five to ten year time frame.” He pointed out that for long term contracts, it is important to have counterparties that are financially strong and reliable. “With these contracts, we have partners who are dependable and trustworthy.”
“CVEC has established a goal of becoming one of the top-rated electric distribution cooperatives in the United States and we recognize that reliable service and stable energy prices are essential in delivering a great value to the members,” said Wood. “The addition of these two contracts is a big win for all.”
Headquartered in Lovingston, Central Virginia Electric Cooperative is a member-owned electric-distribution utility serving 36,000 meters in 14 counties across central Virginia. For more information, visit www.mycvec.com.