‘The sizable increase was the result of a combination of human error, a very cold month, and increased energy costs, together making for a perfect storm for the local electric cooperative and sending shock waves through customers.’
Word spread quickly over the weekend that Taylor County RECC customers could expect a substantial increase in their electric bill being mailed this week, partially due to an error on bills from the previous month.
Bills were available for customers with an online account, and people who had access were taking to social media to share their outrage and concern.
The sizable increase was the result of a combination of human error, a very cold month, and increased energy costs, together making for a perfect storm for the local electric cooperative and sending shock waves through customers.
The error
Taylor County Rural Electric Cooperative Corporation customers will find an extra line of charges on their bill this month, identified as “fuel recovery for January 2022.” That amount reflects a correction to the previous month’s bill for a charge on the second line of that bill, simply identified as “fuel.”
That “fuel” line reflects the “Fuel Adjustment Clause,” which is where utility companies can make adjustments to reflect fluctuations in the actual cost of generated or purchased power.
Typically, the largest cost on a Taylor County RECC bill is reflected on the first line, which is the base rate that is multiplied times kilowatt usage. This rate can only be changed with PSC approval.
The next line, the fuel adjustment line, allows utility companies to make adjustments based on actual costs. In most months, Taylor RECC customers will see a credit on that line.
On the bill mailed in January that covers services for December 2021, however, the fuel adjustment should have been an expense because costs were higher than what was covered by the base rate. According to Angela Bartley, billing supervisor at the co-op, instead of that number being input into the billing software as a cost, it was incorrectly input as a credit.
That was a double whammy, because customers were not charged the fuel fee they should have been charged, and, in addition, they were also incorrectly given that equal amount as a credit. For instance, in the bill reflected in Example 1 below, the fuel adjustment shows -$16.02 but should have been a charge of $16.02. That was corrected in the following month’s bill, shown in Example 2, with $32.05 being billed as the fuel recovery expense.
The cost of energy
“If you look back at past bills, our fuel charge has always been a credit,” Bartley said. “It’s not much, $1, $2, $3, but it’s always been a credit. Well, it changed in January to a charge instead of a credit, and it was a substantial charge, in my opinion.”
The bills customers are receiving this month have an even higher charge for the fuel adjustment charge.
Nick Comer, external affairs director for East Kentucky Power Cooperative, said costs have increased for several months.
“With the second half of 2021, we saw both the cost of natural gas and the cost of purchase power – both of those rose pretty dramatically,” Comer said. “In fact, for the final three months of 2021, the cost of those was about double what EKPC had been paying for that same period the year before. That’s a pretty big increase.”
The fuel adjustment charge includes power either generated or purchased, and Taylor County RECC purchases power from East Kentucky Power. EKPC generates power and, based on the market and demand, may also purchase power from other companies.
“What EKPC is looking at for Taylor County and our other member co-ops, is how we provide electricity as affordably as we possibly can today, whether that is generating it with a coal plant or generating it with a gas plant, or purchasing it from the market,” Comer said.
While some fluctuation is expected, the increased costs this past year were mainly due to an economic recovery from the effects of Covid-19.
“A lot of participants in the market – the producers of natural gas –didn’t expect demand to increase as quickly as it did,” Comer said. That increased demand also increased prices.
Comer said market analysts who study the gas industry are projecting that prices will moderate over the coming year.
“We are hopeful this is a short-term situation and gas and purchase prices are going to return to normal, but certainly, we have a few months here where bills are going to be a little bit higher. We understand that and wish that weren’t the case.”
Bartley said she has been told to expect the fuel adjustment charge to go down for next month’s billing.
“It’s not set in stone yet, but the projected rate for next month – it’s going down quite a bit. It’s still going to be a charge, but on 1,000 kilowatts, you are looking at $8.76 versus $19,” Bartley said.
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January was really cold
To complete a trifecta of circumstances leading to higher-than-normal utility bills, January turned out to be a very cold month. According to Kentucky Mesonet records, the average temperature in Adair County for the month was a chilling 24.4 degrees. The lows averaged 21. 6 degrees.
“We didn’t have a cold December…We had a cold November, but we really had a cold January, so everybody used a lot more kilowatts than they normally use,” Bartley said.
Bartley said the co-op understands that the unexpected increase in electrics bills can cause a hardship for some people. Customers can call the RECC office and discuss spreading payments out over a few months, she said.
“We can try to make it more palatable, but we can’t make it go away,” she said.
The fallout
As word spread from stunned Taylor RECC customers this past week, many reported an increase of hundreds of dollars on this month’s bill compared to last month. Calls were apparently made to the Attorney General’s office from people hoping to file complaints.
RECC posted a brief notice on its website about the error and added a short explanation on this month’s bills.
When asked if he now thinks the co-op should have issued a press release or sent out a notice warning customers to expect a higher-than-usual electric bill, co-op manager Barry Myers paused and then said, “probably.”
“I don’t know if that would have helped,” he noted. “I hate it for our consumers. I truly do. It hit everybody pretty hard,” Myers said.
While consumers may be inspecting their electric bill more than they ever have in the past, they may find some consolation in knowing that their rates are still some of the best in the nation.
“At the end of the day, what we want is to provide power that is as reliable as it can possibly be, meaning it is always there when you need it, and as affordable as we possibly can,” Comer said. “Kentucky overall – I think we do a pretty good job at that because Kentucky’s electric rates are routinely in the top 10 lowest in the nation.”
By Sharon Burton
Editor
