Yampa Valley Electric Association to implement power cost adjustment for all customers
PCA will be spread over a 7-month period due to extreme weather events in the Southwest portion of the country in February
Yampa Valley Electric Association customers will see a new line item on their bill starting in May.
Due to extreme weather events in the southwest portion of the United States in February, Xcel Energy has notified YVEA that it will assess a Xcel Power Cost Adjustment due to fuel costs from February’s severe winter storms.
Texas and the Southwest experienced an extreme weather event that led to an increased demand in natural gas, caused by a lack of supply when it comes to natural gas. Pipes and natural gas headends were not properly winterized, meaning they froze and not enough natural gas was available for homes or power plants. As natural gas is a commodity, the increase in demand and lack of supply drove prices to historic levels.
As Xcel was purchasing those credits, they were doing so at the elevated level, roughly 100 times the price of natural gas the previous day.
In mid-March, YVEA was informed by Xcel Energy to expect a higher-than-average bill for the month of February. Three days later, YVEA was presented with a bill in the amount of $9.78 million from Xcel, which is roughly $6.4 million more than what the energy provider budgeted for February.
The bill from Xcel to YVEA alone represents 30% of what YVEA budget annually for its purchased power.
In the letter from Xcel, President Alice K. Jackson proposed what is essentially a back-pay plan, offering YVEA the ability to pay back the bill from February’ extreme weather events, which will ultimately come out of the customer’s pocket.
“We understand the effect of this unexpected natural gas fuel price increase on our customers,” Jackson wrote in her letter to YVEA. “For that reason, we worked diligently to explore options within our existing wholesale contracts and FERC regulations to offer payment flexibility for February’s bills to our wholesale customers. We ultimately offered you and the other wholesale customer up to six months to pay back the February fuel adjustment component of the March invoice, subject to each contract’s interest rates.”
According to YVEA Public Relations Specialist Carly Davidson, the PCA will be calculated on each customer’s March billing kilowatt usage, which will then be spread out over seven months.
“There is no cap on how much a customer will pay towards the PCA,” Davidson said. “It is strictly based on the kilowatt hours of each customer.”
The PCA from YVEA will affect roughly 21,000 customers.
Knowing that, YVEA will take each customer’s March billing and use those kilowatt hours to determine what each customer’s total PCA is and then will spread it over the next seven months. The PCA adjustment is $.1172 for kilowatts used.
For example, if a customer used 800 kilowatts in March, 800 times $.1172 would come out to a PCA of $93.76 spread out over seven months for a monthly payment of $13.39.
Though YVEA is an energy provider, it does not produce energy, meaning the company buys its electricity from suppliers. What those suppliers charge YVEA is what is then passed on to members in their monthly bills, though never at a markup.
Moving forward, YVEA says it is working with regulatory commissioners to get a full understanding of the how and why these things happened. YVea added that at the very least they are pushing to put rules and regulations in place to try and prevent something like this from happening again.
Managing Editor Joshua Carney can be reached at 970-875-1790 or firstname.lastname@example.org.
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