Cooperatively-Owned Electric Utilities

Cajun Electric Power Cooperative, Inc., is a non-profit, member-owned electric generation and transmission cooperative supplying wholesale electric power to its twelve distribution cooperative owners. Cajun's primary mission is to provide reliable electric service to its member distribution co-ops at the lowest possible cost. These co-ops have a combined membership of nearly 300,000 and serve over one million people in the suburban and rural areas of 56 of the state's 64 parishes in a service area of more than 35,000 square miles, or about 75% of Louisiana's land area. The name and service area of each distribution co-op is shown on the map in Figure 7.; Headquartered in Baton Rouge, Cajun is governed by a 24-member Board of Directors which are elected annually by members of the distribution co-ops. Each distribution co-op is represented by two board members. The company's principal business address and telephone number are:; With 1,882 MW of generating capability (Cajun's share of jointly-owned plants) and a statewide network of 40,000 miles of power lines, Cajun is one of the largest power supply co-ops in the nation. This generating capability is nearly twice the power currently needed by its members during non-peak usage periods. Cajun is aggressively pursuing the sale of this available bulk power and has become a regular supplier to 29 electric utilities in a 12-state market area ranging as far north as Illinois, as far east as North Carolina, and into Texas and Florida.; In 1993 Cajun's electricity sales by customer sector as a percentage of total sales of 5,067 million KWH were 73.4% residential, 16.6% small commercial (<1000 KW), 9.6% large commercial/industrial (>1000 KW), and 0.4% other.⁴⁸; The fuel sources for power generated by plants operated by Cajun in 1992 were 95% coal and 5% natural gas. A small amount of oil was also used. Peak demand in 1993 was 1,781 MW, almost identical to the 1992 peak, for a capacity reserve margin of 5.5%.⁴⁹; The twelve Louisiana distribution co-ops are members of the Association of Louisiana Electric Cooperatives, Inc., headquartered in Baton Rouge. Associate members are the Panola-Harrison Electric Co-op and Cajun Electric Co-op. Pnaola-Harrison is a Marshall, Texas, based co-op that has Louisiana customers in Caddo and DeSoto Parish. Additional information on each member co-op may be obtained by contacting the Association as follows:
Electric Generating Facilities: Cajun operates and either owns or has an interest in three Louisiana generating facilities with a total 1993 net generating capability of 1,882 MW (Cajun's share). According to primary fuel source, this generating capability is 11.2% natural gas, 74% coal, and 14.8% nuclear. The company is the sole owner of the gas-fired 210 MW Big Cajun 1 plant and units 1 and 2 of coalfired Big Cajun 2 (540 MW each unit). It owns 58% of the 540 MW coal-fired unit 3 of Big Cajun 2 and 30% of the 931 MW River Bend nuclear plant. Cajun operates the Big Cajun plants and GSU operates River Bend. The 1992 generating capability of each generating station according to plant owner and primary fuel type is listed in Table 3. The location of each generating plant is plotted on the map in Figure 1.; Cajun's generating capability is about 11.4% of the total capability of the state's utilities and 9.8% of the total capability of all generating sources within the state.; In 1992 the 9,360 million KWH generated by plants operated by Cajun was almost 17% of the total produced by the state's utilities and constituted 12.7% of all power produced in Louisiana. The net generation of each plant according to fuel type is listed in Table 1.; Cajun's coal-fueled units burn low-sulfur coal from the Powder River Basin of Wyoming and operate with state-of-the-art emissions monitoring systems and electrostatic precipitators which enables them to be in compliance with limits set by the federal Clean Air Act Amendments of 1990 (CAAA).
Recent Developments: In 1993 SWEPCO completed its purchase of the Bossier Electric Membership Corporation (BREMCO), a distribution co-op which was adjacent to the company's Louisiana service territory. BREMCO served 12,500 customers in a service area covering 1,028 square miles.⁴⁴; At a February 1994 meeting of rural co-ops in New Orleans, the co-ops expressed grave concern over territory encroachment by investor-owned and municipal utilities. Siding with the co-ops, REA Administrator Wally Beyer sent a memorandum to all REA borrowers on February 3, 1994, asserting that increased competition for lucrative power loads "represents one of the clearest threats to borrowers and to the success of the REA program."⁵⁰; Since February 22, 1994, CLECO has been trying to purchase the Jeanerette-based Teche Electric Cooperative, but the reaction from Teche management has been decidedly hostile. Co-op members first indicated their sentiments on the issue at the April 12 annual meeting when they elected to its eleven-member board four new directors who ran on a platform to support the CLECO offer. On June 30, 1994, some Teche members filed it petition to recall the remaining seven Board members the petitioners claim will not negotiate in good faith. Teche's service area is adjacent to and very similar to CLECO's, and the two systems are interconnected. CLECO already has 157 employees and nine offices in the area. CLECO's rates are about 22% lower than Teche's. If the transaction is approved, about 8,600 customers will be added to CLECO's customer base.^24,25,26; On April 12, 1994, a federal judge began hearing arguments in the first of two civil trials on Cajun's June 1989 suit against GSU. The suit alleges that GSU misrepresented construction costs for the River Bend nuclear plant so as to encourage Cajun's participation in the project. The object of the suit is to annul its 1979 Joint Ownership Participation and Operating Agreement with GSU regarding River Bend and to recover its $1.6 billion investment in the unit. The arguments the judge is now hearing pertain to the portion of the suit by Cajun to rescind the Operating Agreement. If the judge does not rescind the agreement, and Cajun decides to go ahead with related claims that GSU violated the terms of the contract, a jury trial would start in October 1994. Cajun and GSU are also involved in legal proceedings over Cajun's having partially withheld funds for its 30% share of certain operations and maintenance costs of River Bends.^18,52; On June 7, 1994, the LPSC declared that Cajun was imprudent in joining GSU in building River Bend and could not recapture its losses by = its customers higher rates. Cajun has asked for reconsideration or a rehearing.⁵³
History ^9,18,51: By the late 1920s the availability of electric service in urban areas was virtually complete, but the rural areas of Louisiana and the nation were largely without electric service. Beacuse providing electric service in areas of low-density population was unprofitable to IOUs in the 1920s and 1930s, rural Louisianans were forced to live without the liberating force of electricity that was available to urban dwellers. Candles and kerosene lamps provided limited lighting, while human and animal labor supplied limited power to the farms and villages of Louisiana well into the late 1930s.; This problem was addressed by President Franklin D. Roosevelt when he signed an executive order on May 11, 1935, creating the Rural Electrification Administration (REA), which provided low interest loans to co-ops for the specific purpose of bringing electricity to the nation's rural areas. Financed by the REA loans, distribution co-ops were formed in the 1940s and 1950s to erect poles, string lines, and install transformers throughout Louisiana's rural areas.; Louisiana's electric co-ops were organized between 1936 and 1943. Armed with the REA loans, they constructed the distribution infrastructure in rural Louisiana. Most of the work was done by co- op members, who were also the owners and customers. By the mid-1960s electricity was available to all parts of the state.; At first the distribution co-ops purchased all their power from the larger IOUs who owned the generating plants, but as the number of people receiving electric service from the distribution coops increased, the amount of bulk power needed to supply their needs also grew. A number of the state's co-ops joined together to consider methods to best meet the short and long term bulk energy requirements of their members.; This joint planning venture resulted in the formation in 1962 of the Louisiana Electric Cooperative - later to be renamed Cajun Electric Cooperative, Inc. The first tangible step toward achieving this goal was taken in late 1968 when the member co-ops submitted a $56 million loan application to the REA for funds to build what would become Big Cajun 1, a 210 MW gas-fired power plant which went on line in 1972.; Though Big Cajun I was an important source of wholesale electric power for Louisiana's rural electric co-ops, it was never intended to supply all of their bulk power requirements. As had been the case since the founding of the rural electric co-ops, most of their bulk power needs continued to be met by the IOUs.; Soon after Big Cajun 1 went on line, the IOUs advised Cajun they would be unable to supply the co- ops with power after 1980. Furthermore, in 1978 the federal Power Plant and Industrial Fuel Use Act was passed in response to the shortages and high prices of oil and gas brought on by the 1973 Arab oil embargo. The Act prohibited a utility from building a new oil or gas fired generating plant. Faced with this dilemma and load growth of 10-12% per year, Cajun decided to build Big Cajun 2 with two 540 MW coal-fired generating units. These units were completed in 1981, and a third 540 MW unit went on-line in 1983. Big Cajun 2 burns clean, low-sulfur, western coal which meets all federal environmental standards; Based on forecasts of continued increases in demand, in 1979 Cajun entered into a contractual agreement with GSU to purchase 30% of the River Bend nuclear plant. Cajun felt that its 30% share of the 931 MW plant would secure enough generating capability and fuel diversity to meet projected power needs well into the next century.; While River Bend did provide additional fuel diversity and a substantial capacity reserve, the plant was controversial in that completion was delayed, and the cost was much higher than originally estimated. As the plant was being built, the growth in electricity lagged, and even declined in some years. This, along with the delays and cost overruns, caused regulators to question the need for the plant. Ultimately the LPSC disallowed a portion of the plant's cost in the rate base. The plant began commercial operation in June of 1986.; River Bend caused financial difficulty for both Cajun and GSU and strained the two companies business relationship. Finally, in June 1989, Cajun filed suit against GSU seeking to rescind its 1979 contractual agreement with GSU. A federal judge began hearing the portion of the suit to rescind the Operating Agreement on April 12, 1994. If the judge does not rescind the agreement and Cajun decides to go ahead writh related claims that GSU violated the terms of the contract, a jury trial would start in October 1994.; On November 25, 1992, Dixie Electric Membership Corporation and Southwest Louisiana Electric Membership Corporation, two of Cajun's distribution co-op members, also filed suit against GSU, asking the federal court to dissolve Cajun's share of River Bend. This suit is being processed in conjunction with Cajun's 1989 suit.

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