Due to rising fuel costs to generate power, Clay Electric Cooperative will implement an increase in its rates, beginning with July billing cycles. Members using the industry household average of 1,000 kWh of power will pay $134.90, a $5 increase.
The higher cost will be reflected in the Power Cost Adjustment (PCA) on members’ power bills. The additional amount each member pays each month will vary based on how much electricity is used.
The PCA is increasing as a result of higher fuel prices, which is making the power the co-op purchases from its wholesale power provider, Seminole Electric, more expensive. Natural gas has increased from $2.73/MMBtu in April 2021 to more than $9/MMBtu in June of this year.
Clay Electric has been forced to raise its rates 17 percent this year while natural gas prices have increased more than 300 percent in the past 12 months.
General Manager/CEO Ricky Davis said the increase in fuel and commodity prices are projected to increase electric generation costs more than $42.5 million for 2022. This PCA increase will not fully recover the estimated year-end increase in generation costs due to a 14-year high in natural gas prices.
“We work hard to maintain our costs and provide affordable electricity, but these large fuel increases to generate power make this rate change unavoidable,” Davis said. “As soon as prices to generate power go down, your cooperative will lower the PCA.”
The PCA is a separate line item on each Clay Electric bill statement, which reflects the increases/decreases in the co-op's cost of power. The co-op's cost of wholesale power is now more than 70 percent of Clay's total expenses, so it's critical the co-op makes sure it recovers all of its wholesale power costs in its retail sales.
When the cost of power is greater than the amount included in the base rate, the PCA is a charge. When the cost is less, the PCA is a credit.
As a not-for-profit cooperative, Clay Electric members receive power at cost. At the end of each year when it's determined how much revenue exceeds total expenses, the difference is assigned to members as Capital Credits based on the amount each member was billed for electricity during the year.