If you feel the cost of your electric bill is higher this summer than last, you’re right. Everything is more expensive these days, and that includes generating electricity. The rising cost of natural gas has continued to push up the cost of power in Texas and around the world.
The U.S. Energy Information Administration is forecasting an average natural gas price of $7.54 per MMBtu in the second half of 2022. For comparison, natural gas prices averaged $3.89 per MMBtu in 2021 and $2.03 per MMBtu in 2020.
Due to the increased price of natural gas, the cost of electricity we purchase from South Texas Electric Cooperative has risen accordingly. While we originally forecasted a Power Cost Adjustment of 2 cents per kilowatt hour through the summer months, the cost of power has exceeded that and our members experienced a Power Cost Adjustment of 3 cents per kWh last month. Unfortunately, we are expecting a Power Cost Adjustment of 3 cents per kWh again this month.
In addition to the high cost of natural gas, STEC has had to purchase some power at higher market prices this billing period. It’s lignite-fired power plant, San Miguel, was down for seven days in July when electricity costs where highest. Even though San Miguel is back up and running now, replacing the power that San Miguel didn’t generate is playing a part in keeping the Power Cost Adjustment at 3 cents in August.
STEC’s rate on your bill is listed at approximately 7.2 cents per kWh, and that rate will remain unchanged. However, because the cost of generating electricity fluctuates each month, we use a component on your bill, called the Power Cost Adjustment, to directly reflect any changes above or below the set rate.
When costs to generate electricity decrease, we pass those savings directly to our members as a credit on that line item. Likewise, when generation costs increase, we directly pass through the added costs as well. That Power Cost Adjustment is where our members will see increased costs due to natural gas prices.
It’s important to note that SPEC does not make any profit from the electricity that STEC provides. SPEC is a distribution, or wires company. We own and maintain the poles and wires within our service area. We purchase wholesale electricity from South Texas Electric Cooperative, which owns transmission lines and generation resources. We pass STEC’s electricity prices directly through to our members with no markup.
As a not-for-profit electric cooperative, we do what we can to keep costs down for our members. The rate you pay for the service SPEC provides is not changing. In fact, we haven’t increased our rates since 2006.
While we anticipate the cost of power to be on the rise this summer, our members are faring much better than others across the state. Those shopping in the competitive market are seeing average electricity rates of 18.48 cents per kWh and may have to lock in those prices for years. Even with the increased cost of power, our average residential members will pay less than 15 cents per kWh.
Sample Bill Calculation
Below is an example bill that shows what a member, who has used 2,000 kWh, will pay for electricity with the Power Cost Adjustment. This member would pay a total of $296.79 cents for the month, at an average rate of 14.8 cents per kWh.
For comparison, the cheapest 12-month retail electricity plan available in Beeville at this time, is set at 16.5 cents per kWh for a customer that uses 2,000 kWh per month. This customer would pay $330 for the month.
High natural gas costs are driving up the price of electricity across the country, but we don’t expect them to stay this high. Rates will eventually come back down. In fact, the EIA is forecasting that the price of natural gas will fall to an average of $5.10 per MMBtu in 2023 amid rising natural gas production, and that should bring down the cost of generating electricity too.
One of the benefits of being a cooperative member is that when the cost to generate electricity does go down, so will your bill. You’re not locking into high rates for the next year or more.
Take Control of Your Bill
We know that times are tough and understand these increased costs are burdensome for the families that we serve, especially during the summer months when electricity usage tends to be the highest.
While the cost of power is outside of our control, the old math still applies: Less power still costs less. You are in control of the largest variable on your bill -- the amount of power you use. With a little vigilance toward saving energy, you can stay ahead of any increased costs this summer.
And we're happy to help! We offer a free efficiency checkup for our members. This in-home inspection can help pinpoint where your home is losing energy and what to prioritize to make your home more efficient. Give us a call to set up an audit at 361-364-2220, extension 151.
You can also check out our website for energy efficiency tips throughout your home: https://www.sanpatricioelectric.org/energy-savings-tips