Why is my electric bill so high?
The shock of opening this summer’s electric bills has been a hot topic of conversation around town, with residents, businesses, and public officials budgeting for bigger utility bills next year. USA Today reports that 20 million Americans are behind on their electric bills, and rates are up 15.2 percent over last summer. We visited with Fort Belknap Electric Cooperative General Manager and Chief Executive Kendall Montgomery to find out what’s behind the high price of electricity and whether he sees any respite.
The Enterprise: Why is the cost of power is rising?
Mr. Montgomery: We’re just a distribution cooperative. We buy all of our wholesale power from Brazos Electric Cooperative out of Waco, but the price of wholesale power is driven by the cost of natural gas that is used to produce the energy. You’ve seen the gas prices at the pump going up - the natural gas is going up as well. It wasn’t that long ago it was in the $2 to $3 [per million BTU] range, but recently US natural gas prices have been over $9 [per million BTU].
Q: Why is the price of natural gas important to electricity rates?
A: [Natural gas] is still the major fuel used to generate electricity. There’s a big move to renewables and I know that there’s a lot of wind construction and wind turbines … but the natural gas generation and even the coal generation is still there and stable, and that’s what sets the price of the market.
Q: Everybody’s looking at Europe’s energy crisis, and thinking our situation isn’t going to improve. What do you think?
A: Because of the Ukraine and Russian conflict, there has been more demand pressure on US natural gas to export liquefied natural gas (LNG) to Europe to take advantage of their natural gas price markets that are above $80 [per million BTU]. However, I think it could get better for us because from what I understand, we have a rather large supply of natural gas in this country. I think there’s some reluctance to develop it at this point. There is some concern about going forward with new exploration and new development because there is such a push towards more renewable fuel. It’s not to say that renewables are bad - they have a place and I think we need everything. But the problem with [renewables] is they’re not dispatchable. On a really hot day, you can’t turn your solar up anymore. If the wind’s not blowing, you can’t turn the wind up. You can turn a coal or a gas plant up because it is scalable and dispatchable. The people who run those plants can have it available to go, but if they can’t sell that power into the market, they don’t make any money. They lose money. So they cease to exist in a situation like that. In order to have that plant, [they need] some kind of incentive to maintain that reliability so that plant can be called upon to run.
Q: Will Texas have the same problem with ERCOT during Winter Storm Uri?
A: Hopefully not. ERCOT has done a lot toward requiring winterization from [power] generators. They implemented a lot of different plans and procedures for that and had a lot of people going out and inspecting these plants so they should be better prepared. Now, I don’t know if it goes down to negative four or five degrees again, but they should be better prepared.
Q: Why did Brazos Electric Cooperative file for bankruptcy, and did that raise our rates?
A: Brazos provides wholesale power for 16 member cooperatives, as the largest generation and transmission cooperative in Texas. During Winter Storm Uri, they couldn’t [purchase enough] natural gas to fire all their generators so they had to go on the market to [buy power and natural gas]. ERCOT set power prices at the market cap of $9 per kilowatt hour for 83 hours. That’s really expensive because of the amount of energy usage during extreme termperatures. There was a concern that if Brazos passed through all the storm Uri costs, it could’ve bankrupted some or all of its member distribution cooperatives like Fort Belknap. So they basically fell on their sword and filed for bankruptcy on March 1, 2021 to shield the 16 member distribution cooperatives from bankruptcy. Brazos Electric should emerge from bankruptcy reorganization by the end of the year.
Q: Are Fort Belknap and other providers around here doing anything to try to encourage people to See Electric Bill on Page 8 get solar panels?
A: We leave that kind of to the homeowner. We encourage people to consult us before you do that, to make sure there’s a good understanding of what that’s going to do to your electric bill from our perspective and yours so that you know exactly what you’re getting into. We try to be as supportive and impartial about it as we can.
Q: Have you noticed a spike in unpaid bills since last year?
A: Our people have been really good. Of course, we were just getting through the summertime where the high bills are kind of accumulating now. [Delinquent accounts] have gone up a little. If you’re having trouble call us. We will work with you in any way we can.