After a grim reliability forecast from the regional grid operator (MISO) this spring Oakdale Electric Cooperative (OEC) and our wholesale power provider, Dairyland Power Cooperative, have worked hard to keep the lights on. Safe, reliable electricity is our top priority, but electricity production has cost more than expected during our peak summer months due to high electricity demand, delayed coal deliveries and increased fuel costs (primarily natural gas). Combined with higher-than-budgeted purchased power costs in the energy market, expenses hit a threshold to issue a power cost adjustment (PCA) charge in October and will likely be issued in the following months as well.
Originally, a PCA charge of 2.46 cents ($0.0246) per kilowatt-hour (kWh) used in September would show on October bills. For the average member using 1,000 kWh per month, that would have been an extra $24.60 on their bill.
The board of directors off-set that amount with $400,000 that was set aside for future rate relief such as this. With utilizing $400,000, members October bills will have a PCA charge of 1.082 cents ($0.01082) per kilowatt-hour (kWh) used in September. The average member using 1,000 kWh per month will see $10.82, instead of $24.60.
Throughout the year, OEC has been making adjustments to cover rising costs on nearly everything purchased – equipment, materials, fuel, paper. Unfortunately, the regional power market is not immune to rising prices for materials and fuel. PCA charges paid by members directly help pay the increased cost of OEC’s wholesale power bill. This money does not pay for anything else locally at our cooperative.
The PCA provides a monthly adjustment dependent on any differences in the base cost of wholesale power. Having the PCA benefits members by covering monthly power cost fluctuations without having to continually restructure electricity rates. In February and in May, PCA charges were also issued. There is a chance other PCA charges could still occur in 2022.
What impacts the PCA?
The PCA changes based on the cost of wholesale power, which fluctuates for a variety of reasons. During summer months when the demand for electricity is high, power may need to be purchased at market price, which includes additional generation costs. Increased costs for fuels like natural gas also impact the price of wholesale power.
The current PCA charge(s) is the result of multiple factors, including high energy prices in the market, delayed coal deliveries and higher-than-budgeted fuel costs. Dairyland owns two combustion turbine plants (also called peaking plants) – the RockGen Energy Center and Elk Mound Combustion Turbines. These plants run on natural gas and are only intended to be called upon when the demand for electricity is at its peak. In the last year, however, both RockGen and Elk Mound have set generation records because of the need for reliable, baseload electricity on the grid when all other available resources have been utilized. Having these facilities in Dairyland’s portfolio has supported reliability in the region. Power sales from their operation have helped moderate – but not eliminate – higher-than-budgeted power expenses.
What is Oakdale Electric Cooperative doing to help?
Times are tough as the cost of gasoline, groceries and other essential needs are rising. Oakdale Electric is working hard to keep internal costs down, but we can’t control rising fuel costs. Therefore, the board of directors utilized $400,000 from the future rate relief fund to assist members with the PCA.
OEC offers a variety of programs and services to help members save on their energy bills including energy-saving programs, home energy audits, energy efficiency resources, and low-income assistance for the winter.
Contact Oakdale Electric Cooperative if you have questions about your bill or ways to save energy.