craigheadelectric.coop
Member Driven • Service Focused • It’s What We Do Everyday March // April 2018 CECC Newsletter
Fuel Cost Adjustment: Frequently Asked Questions The Fuel Cost Adjustment line item on your Craighead Electric bill usually does not get much attention, except during times of extreme weather conditions, such as the winter weather that Arkansas experienced in December and January. What is a Fuel Cost Adjustment? The Fuel Cost Adjustment is the line item on your Craighead Electric bill that fluctuates in response to the price of fuel used to generate power. Why is it necessary? Craighead Electric does not generate power but rather purchases it wholesale from Arkansas Electric Cooperative Corporation (AECC). When their cost of fuel used to generate electricity (coal, natural gas, wind, solar, and biomass) goes up or down, the difference is passed through Craighead Electric to its members as a Fuel Cost Adjustment. Does Craighead Electric keep any of it? No. All revenue collected from the Fuel Cost Adjustment goes towards paying for wholesale electricity. Why is the fuel cost adjustment so high? - Unusually cold “Polar Vortex” conditions in Arkansas in December and January resulted in large amounts of natural gas being used by gas companies for gas heating and electric power plants for generation, - A lull in natural gas supply, an increase in demand, and thus an increase in price from $3.63/MMBtu in January 2017 to $5.70/MMBtu in January 2018, - Severe gas restrictions during the early January and mid-January cold weather events limiting AECC’s ability to use its gas-fired power plants when needed most, - Low hydropower production due to drought conditions, particularly in NW Arkansas and Oklahoma. Why is it up if it’s not cold anymore? Typically, electricity is billed monthly for the previous month’s usage (the bill you get in March is for the electricity 4314 S TA D I U M B O U L E VA R D
P. O . B O X 7 5 0 3
you used in February). This causes a lag between when the weather event occurs and when the member receives the bill, so a high Fuel Charge could show up several weeks after the fact. Is it always a cost to the members? No. As you can see on this chart, past Januarys saw a negative Fuel Cost Adjustment, meaning our members received a credit in those months.
FUEL COST ADJUSTMENT COMPARISONJANUARY 2018 $0.025776
$0.030 $0.025 $0.020 $0.015 $0.010 $0.005 $0.000 -$0.005 -$0.010
2015 $(0.003915)
-$0.015
2017 $(0.001281) 2016 $(0.008330)
What is Craighead Electric doing to keep it low? AECC maintains a diverse portfolio of different types of generation that fortunately reduces the cost impact of severe weather events. In 2017, AECC’s electricity was generated by coal (54 percent), natural gas (18 percent), hydro, wind, biomass and solar (18 percent), with the remaining coming from regional energy markets. AECC intentionally owns a variety of generation plants with different types of fuels so that weather events like this will have a lower impact on the member’s bill. In short, usage was high when power prices were high; and AECC, due to plant outages and limitations on the plants caused from gas restrictions, was relying on the wholesale markets to serve Member demand at times when wholesale power prices were high. Our primary goal is to provide the most reliable power at affordable prices for our members. If you have any questions about your Craighead Electric bill, please give us a call.
JONESBORO, ARKANSAS 72403
800.794.5012
CRAIGHEAD ELECTRIC IS AN EQUAL OPPORTUNITY PROVIDER & EMPLOYER
870.932.8301