As you know, Winter Storm Uri had a devastating impact on all of us in the state of Texas. I want to share with you rate information that may help you determine your NPEC energy cost for this year and beyond. 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 10 to 15% higher cost in comparison to 2020.
Power cost recovery is mostly comprised of the cost of the fuel that is used to produce the energy that NPEC provides to you each month. Winter Strom Uri caused natural gas spot market prices to spike to a level never seen before. GSEC, our 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 the storm was unfolding.
As reported, natural gas wells froze up and rolling blackouts may have shut down compressor stations that were pushing gas to GS generating facilities so GSEC had to ramp down all of our power plants. That action caused our wholesale provider to stop producing electric energy. This made us 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.
January’s power cost recovery factor was almost $0.00. If NPEC would have accurately charged for the wholesale component in February, the PCRF would have been $0.6902. This would have meant that the PCRF would have added $690.02 to your bill for every 1000 kwhs that you consumed in February.
Since no one should absorb that cost in one month, NPEC 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. I will send another letter soon after the NPEC Board has made a decision as to the approach that will be used going forward.
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.
(Letter sent out to all members dated March 23, 2021.)
Executive Vice President/General Manager