JANUARY 2022
3
WFEC Renewables Report
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Operation Round Up report
A supplement to the Oklahoma Living
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Energy Efficiency Tip of the Month
Lig ght Post
the
the future
OF ELECTRIC RATES
Kiamichi Electric Cooperative (KEC), along with most energy utilities have concerns about the future of electric rates. These concerns are due to the rise of cost associated with the components that impact the cost we all pay for electricity. Factors currently or soon to be affecting electric rates are the February’s 2021 Polar Vortex costs, current natural gas prices and the rising costs of materials and equipment. This is how each of these components will affect your electric bill: THE POLAR VORTEX
The winter storm that occurred in February 2021 was a major winter event. This storm brought frigid air across much of the central U.S. from February 14 through the 20th including some states that are unaccustomed to severe winter conditions. February 15, 2021, was the coldest day in Oklahoma’s history at -.7 degrees. The coldest 2 and 3 day periods in Oklahoma’s history also occurred in February of 2021 when historically temperatures for this period are in the high 30’s to low 40 degrees. The Southwest Power Pool (SPP) is a
regional power market that serves a 14-state region in the central US, excluding Texas. Many utilities purchase power from this market including OG&E, PSO and Western Farmers who is KEC’s primary power supplier. SPP has never had to deal with an event like the polar vortex in their 80-year history. The bulk electric power system was stressed to its limits, resulting in the implementation of rolling blackouts. SO, WHAT HAPPENED?
While there was enough generating capacity in the SPP footprint to serve the load, fuel delivery - primarily natural gas delivery - became a severe problem. Frozen wells and well heads drastically restricted the flow of natural gas to the power plants. Capacity requirements exceeded capabilities so rolling blackouts were implemented to protect the electric grid integrity. The extraordinary demand for natural gas coupled with the severely restricted gas supply pushed fuel prices to extreme levels. Some power suppliers spent more on natural gas in this 2-week period than is typically spent all year. Typical gas prices historically
PUBLISHED FOR MEMBERS OF KIAMICHI ELECTRIC COOPERATIVE
BRETT ORME
CH I EF EX E C U T I V E O F F I C E R
were $2 to $3 per MMBtu, but during the storm, gas sold for $1,200 at peak and averaged $250 per MMBtu. The cost impact of this storm on Oklahoma utilities is in the several billiondollar range. KEC’s primary power supplier’s cost due to the Polar Vortex is $183 million, with KEC’s portion of these costs equaling just over $8 million. This cost is primarily fuel related to keep the generating units going under these extreme conditions and keeping, our members’ lights and heat on. As directed by the State of Oklahoma and the Oklahoma Corporation Commission these costs will be recovered over time to prevent consumers from receiving electric bills potentially in the thousands of dollars and hopefully lessen the impact and burden to our members. The $8 million KEC must pay will be recovered over a 5-year period and will impact KEC’s average member around $5 (5 mills/kwh) per month. These charges will begin on January 1, 2022, which will be reflected in the February 2022 billing for most accounts. CONTINUED ON PAGE 2 >>
