What This Means For WCEC Members and Their Bills
As a non-profit we remain focused on minimizing impacts to the members we serve. WCEC’s tariff provides for a Power Cost Recover Factor1 (PCRF) for the recovery of incurred purchased power expenses. Given the significant impact of the February costs, and to mitigate the impact on WCEC members, the Cooperative anticipates spreading costs over an extended period of time through the PCRF until the cost is recovered.
On May 1, the PCRF will be adjusted from .035 per kWh to .036 per kWh. The new PCRF change will equate to a $1.00 increase per 1,000 kWh. With this adjustment along with normal budget adjustments, total PCRF changes in 2021 equate to an increase of $16.00 per 1,000 kWh.
Further incremental adjustments are pending2 and will be made as necessary based on finalized cost amounts and a board approved deferment period. These will allow us to spread the extraordinary fuel costs of Winter Storm Uri in a way that stretches out the financial burden over time to lessen the impact on the cooperative and on each member.
While it is no consolation, our costs could have been much higher. While extraordinary, the Southwest Power Pool’s (where WCEC buys power for all but one meter) February 2021 costs remained far below ERCOT costs, which other utilities are facing. We are grateful for that.
WCEC Purchased Power
WCEC, fortunately is a member of, and buys its power through the two non-profit G&Ts – East Texas Electric Cooperative, and Northeast Texas Electric Cooperatives. Both organizations, along with their other east Texas electric distribution cooperative members, are working to help us minimize the financial impacts. Currently the G&Ts are investigating long-term financing options to pay the exorbitant bills on our behalf.
What WCEC Members Can Expect Next
This event has shaken the entire industry, and the effects of it will be around for some time in elevated costs. We are not alone. As has been reported in the news, electric utilities including municipally owned and investor owned, are facing the same large financial burdens. This is not something that was avoidable by the cooperative, our G&Ts, or other utilities in Texas. It is an extremely complex issue.
Since the storm, alongside other cooperatives and our statewide association, we have been working with lawmakers to address the issues that were brought to light by this storm. At this time the only sign of potential relief has come from legislation introduced by Senator Bryan Hughes. This legislative session is not over and we continue to hope, and work toward, some sort of price adjustment.
At the end of the day, the bill is owed, and this is what necessitates this PCRF change. Please know, we will continue to work on this daily alongside our industry partners. As we know more, we will communicate it.
1. The Power Cost Recovery Factor (PCRF)
WCEC Members have fixed rates. A base power cost is built into all our rates to help us recover the cost of power that fluctuates on the open market. As wholesale costs rise above the base power cost, the PCRF is used to recover those costs. The main advantage of a responsive PCRF is that as fuel prices rise and fall, it can be adjusted upward or downward. The PCRF is multiplied by the number of kWh’s a meter uses per billing cycle.
This recent PCRF change is driven by what it cost to buy power during the unprecedented weather event, and is passed through to the members. As a non-profit electric cooperative, WCEC does not mark-up power costs or make a profit from these costs.
2. Adjustments Are Projected
At this time estimates are preliminary and based on currently available information. The full financial impact remains uncertain as it is subject to proposed regulatory changes including potential repricing, finalizing meter and settlement data, and other factors. As the complexities unfold, WCEC costs could be revised.