Frigid temperatures in February 2021 led to history-making conditions across the regional electric grid. Due to a shortage of natural gas, high electricity demand, transmission overload, and low wind energy production, for the first time in its 80-year history, the Southwest Power Pool (SPP) had to direct short-term, rotating power interruptions across 14-states.
Increased February Wholesale Power Costs
Electric and gas utilities across the Midwest and plains states are now faced with unexpected costs stemming from wholesale energy purchased to serve members during the winter storm. The financial impact of this event on the wholesale cost of power was significant. Lane-Scott Electric's wholesale power bill for the month of February was close to an additional $3.5 million, when a typical month is around $600,000-$700,000. This increase in wholesale power costs was due to the record-high demand for natural gas in the third week of February. In addition, the extreme cold caused many gas wells and processing facilities in southern states not built to withstand extreme cold temperatures to freeze, which reduced supply. Natural gas is one of the primary resources used to generate electricity at power plants, and as a commodity, it responds to supply and demand pricing. The supply-demand situation caused historic high natural gas prices. Prior to the winter storm, electric providers had access to natural gas ranging from $2.75 per MMBtu to $4.15 per MMBtu. During the winter storm, natural gas prices ranged from $339 to $999 MMBtu.
How Lane-Scott Electric Plans to recover the increased wholesale power costs:
In March, the Lane-Scott Board of Trustees voted to spread the cost for the February excess usage over 42 months to help mitigate costs to our members. There is no interest in this, it is simply a pass-through energy charge from our wholesale energy supplier to you for what was used in addition during the Winter event. In a normal month, electric utilities like Lane-Scott recover the fluctuating cost of fuel for wholesale power generation - natural gas, wind, solar, coal, hydro or nuclear -through an Energy Cost Adjustment (ECA). The ECA can be a credit or a charge based on energy markets and the price of fuel. Cooperatives do not make a profit from this, it's a direct pass-through from our power supplier, Sunflower Electric, to you. The past 21 of 24 months, Lane-Scott has been able to pass along a credit to our members in the ECA. However, these extraordinary February events created an ECA that would have nearly quadrupled member's bills. Our Board of Trustees, knowing that most people could not financially handle the burden, voted to extend the excess energy cost during February 2021 for up-to 42 months.
What will my bill look like?
Beginning with April bills, in the detail of charges section, there is a line item titled “Feb 21 Winter Events.” This is the monthly charge you will see for 42 total months. Below that is how many months remain. To find the total owed simply multiply the amount per month x # of months. The amount of the charge is based on the February 2021 kwh usage multiplied by a factor calculated with the per kwh amount of February’s excess energy bill.
Your Bill and Payment Information
Lane-Scott also recognizes members might want flexibility on how long they will want to pay.
- Payment can be made in full at any time or the number of total months can be revised to fit your needs.
- In order to change from the default 42-month option, arrangements MUST be made with our billing department to ensure the bill is properly adjusted.
- The number of installments/months remaining is reflected for each account. (i.e. You have 41 months remaining of $7.40 per month for the Feb 21 Winter Event.) To calculate the total amount due, simply multiply the amount per month x # of months.
- Every meter that was in use during the event will have a Feb 21 Winter Event line. If there is not a line item for a meter, it was most likely not used during this time.
- Should a member move, or choose to disconnect a meter, the entire Winter Event balance will be included in the final bill. If needed, payment arrangements can be made with our billing department.
- Accounts will be eligible for disconnection for nonpayment of the Feb 21 Weather Event Charges.
- The Lane-Scott Electric payment arrangement policy applies. Up to three payment arrangements can be made per year per account.
- For those members on budget billing, your budget amount was not recalculated but bills will increase by the weather event amount.
We thank each and every one of you for your patience and understanding through this unprecedented event. If you have questions or concerns, please call us directly. We are happy to help!