Just the facts about MEA

The MEA election is in full swing and as members of our electric cooperative, I hope you vote. As is typical during any election, there’s been some misinformation and skewed opinions shared by people who want to influence your vote. I have no interest in influencing how you vote, but I would like to give you the facts. You deserve it.

Fact: The cost of the new EGS Power Plant is within 10 percent of our original estimates. Recent ads have misinformed the public that MEA is 50 percent over-budget. MEA has used two numbers in the media that contributed to this confusion, but either number you use shows we are within 10 percent of our original budget.

Direct plant cost: In 2012, before final design was complete, the board authorized the completion of the final design and construction to be completed at approximately $250 million, plus or minus 10 percent. Today, our direct plant cost is approximately $274 million, which is within 10 percent of the estimate.

All-in cost: In May 2013, with final design complete, the board authorized an “all-in” estimate of $304 million, plus or minus 5 percent contingency. This included direct plant costs and also added financing, pre-construction studies, planning and preliminary design, and related transmission assets. Such ancillary costs are not typically totaled in major construction project costs, but we felt this was necessary to ensure complete transparency of costs to our members. The contingency was later increased to 10 percent due to delays caused by one of our contractors.

You can think of the difference between the two numbers as similar to when you buy a house. Assume you decide you’d like to spend about $250,000 on a place, so you find a house you like and negotiate a sales price of $250,000. Now, what isn’t in that price is the cost of the well test, the inspection, realtor’s commission, financing on the mortgage, escrow on the taxes and insurance, etc. You know that’s all part of your cost. It’s what you planned to spend and budgeted, and what you pay in your mortgage payment every month. But, when your buddy asks you what you paid for your new place, you tell him $250,000.

Similar to that example, $250 million is what MEA estimated to build the plant, and at $274 million, we are within 10 percent of those construction costs. Total, $304 million was what we planned to spend on everything associated with the plant, and the final all-in cost will be totaled once commissioning is complete. We will remain within 10 percent of that number as well.

Fact: MEA’s labor wages are in line with state and industry standards. Even more important, these folks are worth every penny. One recent letter to the editor and radio call-in accused us of paying too much. Having quality linemen, mechanics and technicians saves utilities money every day by being more efficient, safer on the job and by avoiding costly mistakes.

The jobs in question are some of the highest risk and in-demand jobs in the state. These are the guys 60 feet off the ground in a bucket truck when the wind is howling and the rest of us members are sitting by our woodstoves. They are also the folks that leave their cozy beds at 30 below to head up the highway at 3 a.m. because a feeder in Talkeetna is down. They are the ones who vacate their armchairs during the Thanksgiving game, or tell their family on Christmas Day to wait just a few more hours to celebrate because Dad’s got to bring power back on. It’s also the job where one wrong move at work can cause serious injury or death. Anyone want to sign up for that job? Very few do. MEA negotiates the best deal for our members while providing our workers fair wages for their skills, sacrifice, and expertise.

Fact: The cost of producing power is going up throughout the state as lucrative legacy gas contracts negotiated years ago expire and new contracts increase costs. At MEA, 70 percent of your rates are made up by fuel costs. In response, MEA has reduced our capital budget, enacted a freeze on new positions and reduced the budget in key administrative areas to lighten the burden on our members. For our typical member, the combined 2014 and 2015 increase is 26 percent. It is important to note that 22 percent of this 26 percent is due to increases in MEA’s cost of purchased power from Chugach and fuel from Hilcorp.

I hope you’ll join us at the annual meeting on April 28 at Raven Hall on the Alaska State Fairgrounds. We’ll take the time to walk you through these facts and answer your questions truthfully. We are proud of what we have accomplished for our members. Please join us in celebrating, because we are all MEA.

Joe Griffith is the general manager of the Matanuska Electric Association.