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Weekly News 12/6/11

Posted By John Dorka, Tuesday, December 6, 2011

Weekly News 12/6/11

  • Dispatch Article on AEP Rate Plan. The lead article in the Sunday (December 4) Columbus Dispatch is about the proposed AEP rate plan that PUCO is about to vote on that could lead to sizable rate hikes for a number of small businesses. The article resulted from action that a small coalition of trade associations, including OFA, the Ohio Aggregates and Industrial Minerals Association, the Ohio Ready Mixed Concrete Association, and Flexible Pavements of Ohio, took on behalf of our members with PUCO to question the proposed AEP rate plan. The lengthy article does a nice good job describing the issue. Of note is that Superior Hardwoods of Ohio, Inc. is cited in the article in the Big Numbers section as expecting a sizable electric rate increase at its Cambridge sawmill. It appears that the small businesses most impacted by rate increases will be those in the General Service 2 (GS2) rate category, which according to AEP account for 15% of AEP's electricity sales. When AEP negotiated this rate plan, small businesses in this rate category were not represented in the negotiations, while many large users represented at the table fared well in the plan, some expecting significant rate reductions. It should be noted that small businesses are not the only GS2 users who will be impacted. Many churches and schools also fall into this use category. At this point, it is unclear how PUCO will deal with this issue. The rate plan is supposed to become effective January, 2012 and a vote from PUCO on the plan is just around the corner. Currently, there is a fund in the settlement agreement that was set aside to some compensation for highly impacted users. It does not appear at this point, however, that AEP has developed the rules for how that fund will be administered. OFA businesses in the GS2 use category may want to take a close look at your electric rates and contact AEP to get their response on the potential impact. OFA will continue working with the coalition to intervene where we can.
  • BWC News. The Bureau of Workers Compensation announced last week that it will be increasing the maximum discount on group rating programs from 51% to 53%. In addition, BWC announced a new employer program called Destination: Excellence Program. No details are yet available but it apparently will offer additional financial rebates and premium discounts to employers who meet safety and claim management goals. Here is also a flyer announcing the 2012 Ohio Safety Congress and Expo from March 27-29. Finally, CareWorks Consultants is offering a series of Educational Webinars on the Best Practices for Workers' Compensation Management. All of them run through the month of December, are one hour in length starting at 10:30 AM, and are FREE. Details are here.

  • AgHaul Quick Fact Sheet. Work on getting the Safe and Efficient Transportation Act (HR 763 - SETA) included in the next Surface Transportation Reauthorization Bill (Highway Bill) continues. Here is an AgHaul Fact Sheet that was sent to members of the House Transportation and Infrastructure Committee, talking about taking SETA legislation. Speaking of the Highway Bill, Chairman John Mica (House Transportation and Infrastructure Committee) has decided to postpone any work on the bill until after the first of the year due to continuing questions about identifying additional funding sources to pay for new highway projects. AgHaul and CTP continue to urge all coalition members to work on getting additional co-sponsors for the SETA bill.
  • Farm Bill Information. I attended a portion of the Farm Bureau Annual Meeting in Columbus, in particular the discussion on the status of the Farm Bill. Adam Sharp, Director of Federal Legislative Policy spoke about the "secret” Farm Bill proposal that the Super-Committee (SC) was working on. The SC was in fact working on Farm Bill issues, but since the committee failed in its mission, then the "secret” Farm Bill never materialized. It now appears that the Farm Bill will be handled through the normal Ag Committee process in 2012. Interestingly, the SC had recommended a $23 billion reduction in the 2012 Farm Bill appropriations. There was a significant policy shift that Adam passed along, however, from work in the SC and from many discussions on Capitol Hill. He advised everyone to expect Direct Payments (DP) to farmers will cease to exist in the future, possibly with the next Farm Bill. Subsidizing farm payments has far too many opponents in Washington and around the country and it appears that the opposition, with the heavy strain on the federal budget, is forcing the elimination of the DP. The Farm Bill will take on different priorities. Crop insurance payments will become more important. Conservation programs will continue but will be consolidated, with less funding. There will be support for working lands. Here are a few interesting facts about the Farm Bill:
    • The total Farm Bill funding is approximately $80 billion per year, which is 2% of the federal budget.
    • 75% of that funding goes to nutrition programs (food stamps/WIC); the remaining 25% goes to commodoties, conservation programs, crop insurance and energy. One half of all babies born today will receive WIC; one half of all kids born today will get food stamps by their 20th birthday.
    • Direct payments to farmers is approximately 8% of all Farm Bill money.
  • Rural Action Certification "Brand” Proposal. OFA, along with several other secondary wood manufacturers who are involved with or interested in certification, was invited to a discussion hosted by Rural Action to talk about a proposal to develop a certification "brand” and marketing opportunities for FSC certified Appalachian Hardwoods. Rural Action is investigating demand and opportunities for an FSC Certified Appalachian Hardwood Brand. Rural Action advised during the discussion that the University of Kentucky Extension is developing a "Center for Forest and Wood Certification” and will soon be in the position to provide "group” certification services to companies in the Ohio Valley region. The discussion explored marketing and sales issues with certified products. The group did not make any specific recommendations to Rural Action on development of a brand.
  • Hardwood Check-Off Status. I spoke with Grace Terpstra, public policy consultant from Washington DC who is heading up efforts of the Hardwood Checkoff Blue Ribbon Committee, to get a status report on Checkoff activities. She advised that efforts continue to explain the proposal to the industry as committee representatives have made a number of presentations throughout the hardwood region over the past year. It appears that an industry vote may take place sometime in the spring of 2012, possibly as late as Memorial Day. Prior to a vote taking place, the USDA will put the proposal on the federal register for a 60-day public comment period, during which time the industry and the public will have a chance to study the proposal. Green sawmill producers and kiln operating facilities producing hardwood lumber, cants, and railroad ties with annual sales in excess of $2 million will be industry members who get a vote on the proposal. The Blue Ribbon Committee is working with USDA personnel to compile a list of industry members who meet the sales criteria. The committee is asking industry associations for assistance on the list. We are working on plans to have a presentation at the OFA Annual Meeting on March 24, 2012. This may be at the same time that the proposal is on the federal register.

  • Impact of Continuing Log Export Ban from Virginia and South Carolina. Here is an article from The Virginian-Pilot about the impact of the continued Chinese log and poultry export ban from Virginia and South Carolina ports. The article indicates that the export ban on logs has reduced the movement of containers by 4,000 and 5,000 per month during the 6 peak months for log exports.

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