High energy

Thank you to our member-owners for attending the 69th Flathead Electric Cooperative Annual Meeting. Many of the comments at the end of the meeting focused on how member-owners can stay involved and help us when external influences threaten to create instability in Flathead Electric rates. You can help and we appreciate your interest.

As many of you are aware from press releases, the president's budget proposal for 2007 will change the way Bonneville Power Administration repays its debts. Bonneville Power Administration (BPA) will be FEC's primary power supplier as of October of this year. When BPA has a good water year and rivers and streams are flowing high, the dams are generating enough electricity so that BPA can sell the excess electricity to sources inside and outside the region. BPA is able to use this revenue to maintain lower rates for customers.

Unfortunately, the president's budget proposal is asking BPA to pay down Federal debt with any generated revenues over $500 million. This isn't because BPA has fallen behind on payments; in fact, BPA has repaid more than $1.45 billion in early payments over the last five years. This is a request that will raise energy rates from BPA and in turn raise the rates for Flathead Electric's member-owners.

Sen. Baucus, Sen. Burns and Congressman Rehberg are all fighting this proposal in collaboration with other Northwest congressional members. The Senate's Energy and Natural Resources Committee states that designating BPA revenues years in advance for discretionary purposes is inconsistent with sound business principles, and would seriously undermine BPA's ability to operate as a self-financed agency.

We will continue to fight this alongside our congressional delegation. You can also help by opposing this proposal. Simply go to Flathead Electric's Web site at www.flateheadelectric.com. There is a link button on the homepage titled "BPA Rate Alert." Fill in your name and address and your opposition to this proposal will be sent to our Senators and Congressman, providing them with support to continue to oppose this budget proposal. It will also let Energy Secretary Samuel Bodman and BPA know that we are all fighting to keep rates low and fair.

Kenneth A. Sugden

General Manager

Flathead Electric Cooperative