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Southeastern Power Users Group
A new strong voice with and for industry across the Tennessee Valley
Southeastern Power Users Group
A coalition of industries representing larger
power users dedicated to promoting fair and
equitable utility rates and energy cost savings
MISSION STATEMENT: To continually maximize
energy cost savings, promote cost-to-serve utility
rates, and create strategic partnerships for the
good of all member companies.
SEPUG
Purpose
TVA Distributors who are strong supporters of industry
said it best, “Industry must join together now to stop
TVA’s unfair escalation of industrial rates which has
been going on for some time.”
Instead of using fair and balanced approaches to
setting rates on a true cost-to-serve basis, just the
opposite is happening. The reason for this is that a
number of TVA Distributors are trying to keep
residential rates abnormally low. As a result, the
combined impact of TVA’s firm rate increases in
October 2005, April 2006, April 2008, and October 2009
have increased industrial rates by 40% to 50%.
Incredible fuel adjustment increases on 10/1/08 have
added another 25% to large power users. Fuel costs
temporarily decreased in 2009 & 2010, but are already
ramping back up big time. In addition TVA must have
more and more rate increases because of over 3.2
billion in coal ash expenses coming to all coal plants.
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Services and Benefits
 Give member companies a unified voice to
TVA, its Distributors, and to members of the
Rates & Contracts Committee of the TVPPA
 Work for lower industrial rates and a better
variety of rates from TVA through active
participation with all TVA Distributors
 Take on high load factor and low load factor
firm rate disparities within TVA
 Provide regular feedback to our members on
the dynamic market of natural gas pricing
with methods to promote savings
 As a added benefit to member companies, we
will act as an “energy answer team” and
provide ideas and guidance on individual
company energy cost saving opportunities
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“Energy Answer Team”
General guidance to all members on their individual energy
related system questions and opportunities in such areas as:
 Electric and natural gas energy conservation systems
and promoting overall energy cost savings
 Electric primary and secondary distribution systems
and relationship to potential rate savings
 Co-generation and standby generation including
peak-shaving and load-sharing possibilities
 Load factor improvement techniques to reduce costs
 Least expensive ways to correct low power factors
 Advice on the validity and effectiveness of various
energy saving products or systems on the market
 Saving electric & natural gas costs big time by using
high tech heat recovery and heat reclaim exchangers
 Customized energy cost saving seminars at plants
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Structure
 A non-profit coalition of large power users of
electricity and natural gas seeking to reduce energy
costs by all means possible.
 Regularly scheduled meetings will be held at SEPUG
offices in Brentwood, TN and at other member
company locations in Middle, West, and East
Tennessee.
 Quarterly updates to all members including our
activities within the Tennessee Valley and in
Washington, D.C.
 Membership fees per company are $500 per month,
which will cover all plant locations of any company
within the Tennessee Valley. Minimum membership
commitment is desired for a 12 month period of
time. For smaller single companies under 1,000 kW,
membership fees are $300 per month. Our team of
energy engineers are always available to each plant.
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Management Advisors
 Director: Paul W. Holland, P.E., CEO of Energy
Architects, a Division of Paul Holland &
Associates, Inc.
 Brian Burst, Natural Gas Rate Consultant
 Gary Meisner, CPA/MBA and former operating
unit CFO/CIO of Fortune 500 Companies
 Jimmy Williamson, General Manager of
Dyersburg Electric in Dyersburg, TN
 Keith Wilkins, Electric Utility Rate Consultant
 Spike Noonan, CPA, McKerley & Noonan PC
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Industry Advisors
 Curt Buchheit, Chief Financial Officer
Havco Wood Products in Scott City, MO.
 Mike Ward, Engineering Manager
Tyson Foods in Union City, TN.
 Jason Joyner, Engineering Manager
Excel Polymers in Dyersburg, TN
 Mickey Crook, Energy Coordinator
Procter & Gamble in Jackson, TN
 Dan Gerstner, General Manager
Gap Regional Distribution / Gallatin, TN
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Industry Advisors . . . Continued
 Joel Huguley, Procurement Energy
Manager /Vulcan Materials in
Birmingham, AL,
 Todd Wortman, Chief Financial Officer
Franklin Minerals in Nashville, TN
 Bernie Sleadd, General Manager
PML Inc. in Paris, TN
 Stan Carver, Director of Engineering
Hoeganaes Steel in Gallatin, TN
 Phil Boyd, Plant Manager
Unimin Corporation in Gleason, TN
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Action Items Needed Now
 Present case for using a “cost-to-serve” basis for setting
industrial rates with TVA and the Rates & Contract
Committee of the TVPPA, as we feel just the opposite is now
being done by not providing fair and balanced rates to large
power users.
 Inject new rate ideas into rate proposals being reviewed for
industry by TVA and the TVPPA for implementation in 2011
and 2012, because TVA’s rates have doubled since 2004
 Communicate with all 14 TVA Distributors who are on the
Rates & Contracts Committee of the TVPPA as well with the
other major TVA Distributors within the Tennessee Valley in
order to let them hear a direct voice from their large power
users and from all industry within TVA. During the past 5
years TVA’s industrial rates have gone up twice as fast as
their residential rates putting a real burden on profits.
 Schedule regular meetings with U.S. Congressmen,
Senators, and their chief of staffs to help pull TVA back in
line on their industrial rates. We will be focusing on
positioning and leverage with the Tennessee Delegation.
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Action items … Continued
 High load factor customers provide higher rates of
return to TVA and its Distributors and should have load
factor discount riders or proper time-of-day rate
incentives to lower their costs
 Lower load factor customers can provide flexible
benefits to TVA’s system during tight generation
through load control programs and can vary their
operations with well designed time of day rates.
 Represent the interests of past VPI customers of TVA,
whose electric budgets were destroyed in 2005 by much
higher VPI energy prices (because of “High Fuel Costs”)
due to covering costs for the firm rate users. A
challenge is underway for recovery of at least 35 million
in overpayments.
 Some industries within TVA have seen 100% increases
in their total cost per kWh from 2005 through 2009 and
in addition later in 2010 TVA’s fuel adjustments are
moving back up and more rate increases will be
necessary to cover coal ash remediation expenses of 3.2
billion at all coal plants to convert from wet to dry ash.
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. . . Additional Action items
 And last, but not least, work for a much better
variety of interruptible and curtailment rate
offerings for both high and low load factor
customers who can provide good benefits to TVA’s
peak generation needs. We are asking TVA to
consider incremental demand rates where plants
can help out some, but not for the entire peak
periods. This way all plants can help reduce peaks
In his representation of clients
before regulatory agencies and
with utility boards across the
country, Paul Holland has been
successful 100% of the time.
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Contact Information
Southeastern Power Users Group (SEPUG)
5123 Virginia Way
Suite C-21
Brentwood, Tennessee 37027
Contact: Paul W. Holland, P.E. (Executive Director)
E-mail : [email protected]
Phone: 615-221-9022
Fax: 615-221-9672
Website: www.sepowerusers.org
SEPUG
Southeastern Power Users Group
Working Together as an Effective Coalition of Industries, We can get Fair
and Balanced Rates and bring Jobs back to the Tennessee Valley