CEO’s Report – December 2015
Thank you to everyone who attended our annual Budget Meetings held recently. This year, we decided to change up our traditional meeting format and kicked each meeting off with some answers to frequently asked questions. After visiting with several customers beforehand, we realized there was much confusion, mainly due to the Integrated System (IS) transitioning into the Southwest Power Pool (SPP).
We started at the beginning, explaining which entities make up the IS and why the decision was made to move into SPP. The IS is owned jointly by Western Area Power Administration, Basin Electric Power Cooperative and Heartland. SPP provided the best possible option for the IS. Essentially, it would have cost more not to join an RTO and SPP proved to be the most customer-friendly, least-cost option.
Next, we explained how operating in SPP is different than how we have traditionally operated and how that affects customers. The move affects Heartland from an operational perspective with a new and expanding workload. We highlighted some of these changes in our November newsletter. Fortunately, the move does not affect customers administratively. The biggest change customers will see comes in their wheeling contracts, which may be decreased or eliminated in some cases. Wheeling agents now recover a portion of their revenue through the SPP tariff, which led to the change in those contracts.
Heartland Chief Financial Officer Mike Malone walked customers through our 2016 operating budget and explained that Heartland is not making any changes to the existing demand and energy rates for 2016. However, associated SPP transmission costs will be directly billed to each customer. This will be a separate line item on each customer bill and a direct pass through with no mark up. This transition allows for more transparent identification and allocation of transmission and related costs for each individual customer. Customers that do not receive network transmission service or drive out charges from SPP will not see any changes.
By altering the format of these meetings, I believe we allowed for a more open dialogue with you, our customers. Our goal was to be as transparent as possible about our budget process and we felt the meetings were a positive experience for all involved. We hope we cleared up some confusion by directly addressing the questions we had ahead of time, and the questions asked at the meetings.
If you were unable to attend one of the Budget Meetings, or attended and still have questions, please give us a call. We are happy to go over any aspect of the 2016 budget, or further explain the transition into SPP.