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Friday, Apr. 29, 2016

NAEC customers get relief from high fuel charge

Thursday, March 9, 2006

Customers of North Arkansas Electric Cooperative may have noticed a decrease in their power bill. NAEC CEO Mel Coleman said the cost of excess fuel charges dropped significantly from the record high in January. The power cost adjustment has fallen from 3.8 cents per kilowatt hour to under 1 cent, which marks a return to normal power cost adjustment range, he said.

"We are extremely pleased with this month's drop in excess fuel charges from our power supplier. The latest information is that we will see additional fuel charges through most of the year. Some of the summer months might be significantly higher than this month; however, there are indications that the situation might be softening," Coleman said.

Coleman said depending on the individual, power costs may go down but usage may go up which also affects bills.

Coleman said the Feb. 1 bill had an excess fuel charge of $1.8 million which was shared by all 34,618 NAEC members. NAEC has generally relied on coal as its primary energy source, because it is six times less expensive than gas.

Coleman said all 460,000 Arkansas Cooperative members had to share high fuel costs. NAEC has little control over the charges which are passed to members in the power cost adjustment, he said.

Excess fuel charges were brought about when Arkansas Electric Cooperative Corporation used its natural gas and fuel oil generation plants which are an expensive market for energy.

Coleman said reduced shipments of coal from Wyoming by Burlington-Santa Fe and Union Pacific Railroads were caused by deterioriating track conditions which led the railroads to enact a clause in their contracts. Coleman said Wyoming coal is the hottest and cleanest burning coal in the world. He said that BNSF and Union Pacific are currently the only options the power supplier can deal with.

"Coal inventories are moving up slowly, and the mild January helped moderate the market price of natural gas. These are better trends, but the information is very preliminary for any long-term predictions," Coleman said.

AECC is one-third owners in two of the states largest generation plants, Independence in Newark and White Bluff by Pine Bluff. Entergy of Arkansas is the plant manager of both facilities as well as being one-third owner along with AECC and several smaller entities.

Coleman said he thinks Entergy made a mistake by going into the summer months last year with only one-third of the coal needed.

The use of natural gas is what has been driving prices upward Coleman said. He said at the end of 2005 gas was $12 per MBTU compared to 7-8$ which it is now. Coal prices remain at a constant contracted price he said.

Coleman said natural gas is a substitute when coal supplies are low. Natural gas prices vary according to many factors he said. "Any weather extreme in any part of the nation effects the price of natural gas," he said. Besides the weather, he said natural gas is effected by consumption, with developing nations having a large impact because of the appetite for raw materials they have.

NAEC has six percent ownership interest in AECC. Seventeen distribution cooperatives are part of AECC.

Coleman said NAEC retail rates currently average around 7.8 cent per kilowatt hours, well below the national average of 10 cents per kilowatt hours.

Coleman said the bottom line of the bills is also indicative of weather trends and this month's bill reflects increased usage for many customers. The power cost adjustment is down significantly, but kilowatt usage impacts the amount of bills.

"At some point, unlike other forms of energy, the price of electricity will return to normal levels, similar to this month. Now and in the future, electricity will be the absolute most economical way to heat and cool your home and heat your water," Coleman said.

"In the end, when this crisis is over, others can and will be held responsible for the coal shortages. If we are able to recover any damages (excess fuel charges) we will pass these back to NAEC members," he said.

Coleman said the normal fuel cost adjustment is usually between the cost of 1 cent or a 1/2 cent credit.

"It could be a roller coaster ride from here to the end of the year," Coleman said.

For additional information, contact Leah Rouse at North Arkansas Electric Cooperative at 870-895-3221 or lwalker@naeci.com.

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