Power Cost Adjustment Increasing July 1
Like nearly everything else, from groceries to gasoline, from used cars to hotel rooms, natural gas prices have increased dramatically this year.
Natural gas prices have roughly doubled since the beginning of the year.
In A&N Electric Cooperative’s region, natural gas is a fuel source that is widely used to generate electricity, which is transmitted and distributed to our local co-op members. That natural gas is used to generate approximately 40% of all the electricity provided in the region.
Due to the tremendous spike in natural gas prices, two power cost adjustment increases have been instituted to cover the higher cost of power generation. One occurred in May; a second will be implemented July 1.
Cooperative members will see an estimated 10 to 15% increase in rates directly associated with the increase in the cost of natural gas used to generate electricity.
Mid-year wholesale power rate increases have been extremely rare in recent years.
Natural gas prices were very stable for most of the past decade which contributed to that electricity rate stability. The dramatic rise in prices, coupled with extreme volatility, have created a circumstance that requires generation facilities to recover the higher costs of power generation.
A&N Electric Cooperative and its power supplier, Old Dominion Electric Cooperative, work hard to keep power costs as low as possible as well as keeping those costs stable.
One strategy a power supplier will utilize to manage power supply costs is a natural gas hedging program. These hedges act like an insurance policy against higher prices. When prices go wild like they have recently, the insurance policy pays off and helps buffer the rates from a more dramatic increase. If these hedges had not been in place during this drastic rise in natural gas prices, the resulting increases would have been far worse and more in line with other utilities.
These rate increases are not unique to the cooperative’s region.
Power suppliers from across the mid-Atlantic and the entire country are facing higher energy generation costs that are causing rate increases from coast to coast. ODEC also passes along rate decreases when prices drop. For instance, A&N Electric Cooperative members have recently experienced two years of Power Cost Adjustment credits. Beginning in 2020 the credit for local residential co-op members was $2.13 per 1,000 kWh. The credit increased to $6.02 per 1,000 kWh in 2021.
The increase in rates plus the normal increase in member’s usage associated with hot summer weather will lead to unusually higher electric bills. If a member is struggling to pay their electric bill, we encourage them to contact our office to discuss their situation.
Co-op members are urged to utilize the monitoring tools offered with SmartHub, to help manage their energy use. Members should also look to cooperative programs like budget billing, which can help make bills more manageable.
The cooperative also offers an in-home audit program to help identify issues in the home that can help reduce energy use. Members Helping Members, along with social Services programs can also help with electric service bills.