Cost of February weather event impacts electric bills
By Zac Perkins, Chief Executive Officer
As a locally-controlled, member-owned electric cooperative, TCEC strives to deliver safe, reliable electric service at the lowest cost possible. Keep in mind, this is not always the cheapest electricity, which would not necessarily be safe or reliable.
The February 2021 weather event, also called the Deep Freeze or Winter Storm Uri, caused TCEC’s wholesale power provider Golden Spread Electric Cooperative, and subsequently TCEC, to incur extremely high power costs. Unfortunately, those costs must be recovered. After much deliberation, we reached an agreement with Golden Spread Electric Cooperative, of which TCEC is one of 16 member cooperatives. They have agreed to finance $35 million, which is TCEC’s portion of the power bill for that eight-day period in February. The cooperative will pay this back with interest over approximately 10 years.
The TCEC Board of Trustees has decided on the best approach to recoup these costs. On your August electric bill for July’s energy use, you will see a new line item for “Feb 2021 Weather Event Rider.” The rider will multiply your kilowatt-hours (kWh) used by $0.003. This is the equivalent of an additional $3 per 1,000 kWh used. This line item will remain for approximately 10 years.
You may recall the cooperative added 1 cent to the power cost adjustment (PCA) line item for the weather event. This cent will be removed and the PCA will continue to fluctuate to reflect actual generation and transmission costs incurred by the cooperative to deliver your power. The PCA is derived from a wholesale component of the rate that you pay for electricity and generally reflects the cost of the fuel that is used to produce the energy that TCEC provides to you each month. The PCA is a pass-through cost from Golden Spread Electric Cooperative.
Your energy charge as defined by TCEC’s tariffs is not changing. The board of trustees has the best interests of the members they represent at heart. This is one of the advantages of being a member of a locally-controlled cooperative. People you know are looking out for you.
To recap the reason for the extremely high power costs, February’s cold weather event caused natural gas spot market prices to spike to a level never seen before. The Southwest Power Pool (SPP) experienced an energy emergency due to record demand and limited supply of natural gas. Golden Spread Electric Cooperative hedges the market to some extent but still paid higher prices for part of the fuel needed for generating electricity. Natural gas spot markets were about $2.50 per MMBtu before the deep freeze. During the deep freeze, natural gas prices ranged from $339 per MMBtu to over $999 per MMBtu.
To put February’s power costs for that eight-day period in perspective, a normal power bill for the entire month of February is around $3 million as compared to $35 million for eight days. Costs like these are staggering and we are working with our legislators and partners to prevent this from happening in the future.
We know it can be a challenge to pay abnormally high bills. That is why we worked so hard to find the lowest possible cost solution for our members. I urge members with high electricity use to find ways to be more conservative or efficient. We have tips to save energy published on www.tcec.coop or you can call our member service team at 580-652-2418 for more information.
This article will be published in the August 2021 LiveWire member newsletter.