Due to higher-than-expected power costs experienced in late 2022 and early 2023, the Generation and Transmission (G&T) rate, which is used to recover power cost, will change on bills distributed on or after April 1, 2023. The recovery cost will be adjusted from $0.081/kWh to $0.085/kWh. This adjustment will result in an approximate $6.00 per month increase for an average bill of 1,500/kWh.
As a not-for-profit cooperative, GVEC doesn’t profit from the rate charged to members for electricity. We pass the wholesale cost we pay directly to members without markup.
How GVEC Sets the G&T Rate to Recover Power Cost
The Cooperative procures its power supply from numerous suppliers that operate in the competitive wholesale energy market in Texas. GVEC attempts to mitigate risk and volatility from the market by purchasing power for varying time periods and quantities. The price of this power does vary over time depending on market conditions and fuel prices, particularly natural gas as it is the dominant fuel used to generate power in Texas. In 2022, natural gas prices rose to levels that had not been seen in years. This resulted in higher-than-expected prices, which drove up GVEC’s costs.
If GVEC were to pass market fluctuations on to our members as they occur, rates would follow suit and constantly change from month to month. In an effort to shield our members from the volatility, rates are set based on projected costs of power for at least a 12-month period. The Cooperative’s objective is to implement a rate that can be held constant for 12 months or longer. In recent times, however, the market has become more volatile and difficult to predict. For this reason, GVEC has had to change its rate more frequently. The overarching goal, over time, is to have an equal price between what the Cooperative and the members pay for power supply. This is never exact. Some months, the Cooperative over recovers, and other months, it under recovers. Recently, the G&T rate has not been sufficient to recover GVEC’s power supply cost, leading to a significant under recovered balance.
Returning Equilibrium to Cooperative Rates
Staff closely watched natural gas prices between late 2022 and early 2023, hoping a rate adjustment could be avoided. Although costs have indeed come down, it hasn’t been enough to avoid a prolonged period of under-recovered power supply costs. To make up for this gap, rates are being adjusted accordingly starting with April bills.
Please know, the decision to adjust rates is never taken lightly by GVEC’s Board of Directors or staff. As stated above, we never make these decisions for a profit motive. GVEC strives to keep rates as low as possible, but sometimes adjustments are unavoidable. That is the situation we face now.
We’re happy to answer any questions you may have. Just call us at 800.223.4832, Monday-Friday, 7:30 a.m. to 5:30 p.m., and one of our customer service representatives will provide tools and resources available to support you.