October - National Co-op
he buzz for members of CKenergy Electric Cooperative
October 2021
Month
October 27 - Oklahoma
Living Focus Group will meet at the Binger office from 5:30 p.m.-7:30 p.m.
a supplement to oklahoma living
in the water heater at normal pricing. During that 14-day period it cost as much as $168.00 per day for the same amount of heated water. Now multiply that difference by several million customers, and that’s just for hot water.
The Verdict is in on Polar Vortex Cost By Boyd Lee, Vice President of Strategic Planning
F
or months, you’ve heard about the astronomical fuel costs resulting from February’s weather phenomenon known as the Polar Vortex. The 14-day period in February brought one of the longest, deepest, cold weather snaps in our state’s history. Along with the brutal weather came several “human” produced problems that led to a shortage of available energy at normal prices. The extreme weather led to short-term rolling blackouts and never before seen costs for fuel to run gas generating plants which were needed to replace the renewable energy which was unavailable due to conditions. In our country's attempts to mitigate carbon emissions through renewable energy sources, we unwittingly found ourselves at a time where those renewable sources of power succumbed to the frigid conditions. There was little to no wind, and there was ice on the blades of wind generators. The solar panels had snow and ice on them, not to mention the overcast skies. Ice, snow, no wind, no sun…
bummer. But never fear, there is plenty of coal and natural gas generation to cover, right? Unfortunately, most coal plants were at reduced capacity due to emissions regulations; many gas plants were down for routine maintenance since there was plenty of wind and solar. (Remember the bummer statement?) Adding insult to injury, a large number of the gas pipelines that could feed the available gas generating plants had frozen valves and wouldn’t operate…disaster! Suddenly, the Southwest Power Pool (SPP)found itself looking for power from anywhere and everywhere including out of state resources. The SPP manages all transmission and generation assets in a 14-state area including Oklahoma. An overwhelming demand for natural gas occurred and prices rapidly increased. Eventually those prices reached devastating levels of $1200/MMBTU compared to normal pricing of $3/ MMBTU. In understandable language, if you have a gas water heater, it would cost roughly $0.14 cents per day to heat water
The Polar Vortex gas costs have finally settled at about $2 billion dollars, just in Oklahoma, for 14 days. OG&E is currently seeking a rate increase of $875 million dollars while Public Service of Oklahoma is seeking $732 million dollars. Many municipal systems and electric cooperatives will be passing through all the Polar Vortex expenses in their monthly bills for the next 5 to 10 years in one form or another. The portion of the wholesale costs borne by CKenergy for that 14-day period is $12.5 Million dollars. So, how will this impact CKenergy members rates you ask? We’ve saved the best news for last! NO IMPACT! None, nada! Your cooperative has made several financial moves in the past five years including consolidation of cooperatives, enabling us to write off the polar vortex expenses out of annual margins. Our plan is to do that over the next five to eight years. Incentive programs like load control and geothermal heat pumps and others are paying off. Plus, your CEO, his staff, and the Board of Trustees have made very careful decisions regarding employment and lending rates which have put us in this position. Where’s the hidden costs, you ask? The write off will make our margins lower for the next few years as we absorb the costs. This simply means in 20 years, the capital credits that are paid back will be less than they could have been. Oh well, at least the rates won’t be going up! So relax, CKenergy members. We’ve got your back. Oh, and pray for different weather this winter.