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Tuesday, May 3, 2016

Cost adjustment increases bills

Friday, April 11, 2008

(Photo)
Photo by Jody Shackelford
Jody Shackelford

Staff Writer

North Arkansas Electric Cooperative members will notice a substantial new charge to their April bills labled power cost adjustment.

According to NAEC's CEO Mel Coleman, the power cost adjustment is the increase in the high cost of power being handed down from the energy wholesaler.

The extra charge is the excess of what it cost over the filed wholesale rates with the Arkansas Public Service Commission. The costs of these overages are divided among the 480,000 cooperative customers in Arkansas.

Any amount over the rate in place is fed directly to the customer.

"The power cost adjustment on customer bills this year will be at least what was earlier projected, if not higher. The average for 2008 will be in excess of 1.5 cents/kwh," Coleman said.

A contributor to the problem was a coal-fired generator that was out of service for repairs. To maintain the power output natural gas had to be used in place of the coal. The cost of the gas was around $10 per unit while it was only $2-$4 not too long ago, Coleman said.

"These two problems equate to a very high power cost adjustment, which should be reflected on all April 1 bills. When all things coal are performing well, natural gas fuels about 25 percent of our generation of electricity, but significant moves in natural gas prices have a huge impact on electric bills, specifically the power cost adjustments," he said.

Observing the future of the energy market, Coleman said the outlook is not positive.

"We expect to see natural gas continue in this price range through the rest of the year. The energy markets are absolutely going crazy right now, and have a direct impact on all generation fuels," he said.

Coleman said, elected officials are pushing for more renewable energy sources while they are not considering the gargantuan costs of these projects that will be pushed down to the consumer.

"The construction costs alone are staggering, and just the debate on climate change has all but dried up any reasonably priced funds for financing new coal generation," he said.

"Bottom line is coal generation financing will be at a premium, if we can even get it. Which means either paying the premium, or moving more into natural gas, which is also very costly. This is exactly what the proponents of climate change want to happen."

"In their eyes the only thing better would be to drive us fully to renewable generation (wind, solar, bio-mass), which would be devastating, forcing the American people back into the dark ages by making electricity so unaffordable that usage would drop, and many would lose their quality of life," Coleman said.

These situations are now affecting, or will affect all electric utilities, in all states, he said.

"Actually, the Arkansas cooperatives are much better positioned than others with our rich coal generation portfolio, and with our owned hydropower on the Arkansas River. Plus we have made good decisions over the past 20 years or so in regards to generation plant construction and plant purchases. But the time is getting closer for this needed new generation, and we will soon begin to see the upward pressure on rates," Coleman said.



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