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Electric power associations confronting steep fuel cost climbs.

Article Excerpt
Mississippi's 26 electric power association cooperatives play a vital role in providing electricity to 101,000 businesses and 632,000 residential customers in the state. As with for-profit utilities, steeply higher prices for natural gas and fuel oil used to generate electricity are causing concerns-especially in light of Entergy Mississippi's proposed 28% rate hike for increased fuel costs.

Those who are paying attention to rising energy costs around the world should not be surprised by Entergy's fuel cost adjustment increase, says Michael Callahan, executive vice president JCEO of the Electric Power Associations (EPAs) of Mississippi.

"The public knows about the price increase for crude oil and gasoline," Callahan said. "But since January 2008, U.S. natural gas prices have risen more than 81%. Coal prices and coal transportation costs have increased by nearly that same amount. Fuel expenses are, by far, the largest driver of our costs to provide service to our members and those costs now account for about half of the member's bill. Power plant operators will also be facing significant new costs for environmental compliance over the next several years as the Clean Air Interstate Rule goes into effect in 2009 and 2010."

Economic concerns

The troubling increases in fuel prices are only one problem. Another is the decline in the economy. EPA managers across the state report delinquencies are increasing, and more customers are paying with credit cards.

Some EPAs are increasing rates....

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