The Driving Factor of Higher Bills

When prices go up, it can impact everything from free time to food. So when your electric bill arrives in the mail, it’s an unwelcome sight if the amount exceeds your expectations or surpasses your monthly budget.

“What’s Happening?”

In the past couple of months, that question has been asked frequently to member service representatives at People’s Electric Cooperative (PEC). When 100 degree plus outdoor temperatures have climbed, air conditioning units have worked overtime to maintain cooler and more comfortable temperatures inside our homes and businesses. Electricity usage by PEC’s residential members in July was 23% higher on average than usage from July 2021, and some members experienced usage increases much higher than that .

When meters spin faster, usage increases, all the while the cost of fuel to run PEC’s generators and to purchase power has also climbed this summer due to higher fuel and wholesale power costs.

Kevin Wood, PEC’s executive vice-president and CEO, explained, “These factors combined--weather, usage and increased power costs--have created greater variances in this year’s summer bills in comparison to previous extreme weather years when temperatures and usage were high, but fuel and power costs were more stable. Today’s energy market is uniquely different and under pressure. All three of these combined factors are driving the increases members are seeing in their monthly electric bills at an alarming degree.”

“So, What is the PCA?”

Wood said the “Power Cost Adjustment or PCA factor” listed on members’ bills represents the monthly fluctuations in fuel expenses associated with generating and purchasing wholesale power that PEC distributes to its members. A higher PCA is a direct result of the increased fuel costs we’re experiencing to purchase and generate power. For example, natural gas prices over the past twelve months are approximately 115% higher than the previous year’s prices. In years past when natural gas prices have spiked, the use of coal burning generation stepped in to help regulate energy prices. However, coal generation continues to succumb to more strict environmental regulations which have led to greatly reduced coal production. This and other issues such as rail and supply chain problems have led to increases in coal prices as well.

“The same thing that’s happening to people buying groceries and gasoline is happening in the energy industry,” said Wood. “When we have to buy power on the open market, we’re finding the cost of that electricity to be much higher and wholesale power costs are up for all utilities, not just PEC.”

“How Long Will it Last?”

Predicting how long PEC will continue to experience high energy costs to deliver power is difficult to do; prices will be driven greatly by the future price of fuel (primarily natural gas) and purchased power, global economic and political conditions, and future weather patterns that will directly influence member usage.

It’s important that members understand that we’re all in this together,” Wood said. “We are local. We are built by the communities we serve. We are keeping a watchful eye on the price of fuel and purchased power costs. Providing strategies to reduce electricity consumption not only lowers the costs for individual members, but it also contributes to reducing PEC’s overall system demand.

“What Can I Do to Help Keep My Electric Bill Lower & Help All Members?”

“It may not seem like much, but if everyone can make a few changes where it’s possible, it will make a difference,” said Kyle Stuart, senior vice president of administration. Stuart said PEC messaging in recent months has focused on energy-saving steps that members can take to lower their bill and reduce their consumption.

  • Turn on ceiling fans, then move the thermostat up a degree or two;
  • Try and not wash and dry clothes and use your dishwasher between 3 pm and 7 pm;
  • Turn off lights when not in use;
  • Cook dinner outside, if possible, to eliminate additional heat in your home.

“While PEC does not currently offer any incentives for off peak energy use, we are encouraging our members to try to shift energy use, when possible, during what we call ‘power rush hours’ between the hours of 3 p.m. and 7 p.m. The price PEC pays for purchased power often climbs daily, but especially during the power rush hours when the outside temperature is at its highest and folks are arriving home, cooking dinner, pushing the thermostat down, turning on the TV(s), etc.,” Stuart said. “When we all work to conserve energy, it’s a win for not only the individual consumer, but also for our entire system’s capacity needed to keep the power flowing.”.

Consider PEC’s Average Monthly Payment (AMP) plan to spread the cost of heating and cooling your home or business over the whole year to account for seasonal increases in usage. AMP makes your bills more predictable and monthly budgeting easier.

Enroll now by calling our Member Services department (Monday through Thursday, 7:30 a.m. to 5:30 p.m.: Friday, 8 a.m. to 12 p.m.) at (580) 332-3031. Or email us.