Winter Storm Uri had a devastating impact on all of us in the state of Texas. “I want to share with our members rate information that may help them estimate their Lamb County Electric Cooperative energy cost for this year and beyond,” said Boyd McCamish, General Manager/CEO. The Power Cost Recovery Factor information below has not been reconciled completely, so it is subject to adjustments.
“First, your tariff rate is not changing. The monthly Power Cost Recovery Factor that is referenced each month on your statement will be higher. A reasonable expectation at this time is an estimated increase of approximately 10 to 15% higher cost in comparison to 2020”, McCamish continued.
Power cost recovery 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 LCEC provides to members each month. Winter Storm Uri caused natural gas spot market prices to spike to a level never seen before. Golden Spread Electric Cooperative, LCEC’s wholesale provider, purchased gas to cover member loads on the days leading to the storm in anticipation of market fluctuations, but they paid progressing higher prices for gas to fire our power plants during that time. Natural Gas spot markets were near the $2.50 per MMBtu level before the storm rolled into Texas. There were reports of that spot market reaching $1,250 per MMBtu.
As reported, natural gas wells froze up and rolling blackouts might have shut down compressor stations that were pushing gas to GS generating facilities, so GSEC had to ramp down all of their power plants. That action caused Mustang Station and Antelope-Elk Energy Center to stop producing electric energy, so consumers were susceptible to both the ERCOT and SPP market price spikes for several days during and after the storm moved out. As referenced in the paragraph above, natural gas was also at extreme price levels.
Since no one could absorb that cost in one month, LCEC must spread the cost over some determined timeframe. That determination has not been made yet, but should become more obvious over the next two or three months, after the LCEC board has made a decision as to the approach that will be used going forward. This unprecedented demand resulted in high electricity and natural gas prices. During Winter Storm Uri, Golden Spread Electric Cooperative’s energy cost alone was 69 cents per KWH, up from the 2.3 cent per KWH average.
“We want to keep you informed”, said McCamish. The high electricity and natural gas prices will result in an increase to Golden Spread’s costs, which, in turn, will increase our costs. Those extraordinary costs will start being collected in April. If you have any questions or concerns about what your bill may look like, please call 806-385-5191. “Rest assured, we are here to help. By working together, we can get through these challenging times.”
“The storm that caused this situation was unprecedented, and ultimately humbled all of us. This event is being scrutinized from every angle and lots of folks down state are looking for someone to blame, and expecting changes to be implemented. We can make many changes, but altering the weather will not be one of them. We will always have to deal with Mother Nature.”