Speaking candidly to those we serve, especially through times of adversity, is critical to building and maintaining trust. February’s record-breaking Winter Storm Uri (as it’s been named), continues to remind us of this simple truth. Now, we again find ourselves in the position of communicating the need for another Generation and Transmission (G&T) rate adjustment.
Reckoning with Causes, Lingering Effects
Since the storm’s aftermath, government leaders, regulators and industry experts have been debating how the market should be redesigned and improved to ensure this type of event does not happen again. The factors are multifaceted and complex, and it will take time to establish a feasible long-term solution that balances the overall need for reliability with long-term affordability. As we pay close attention to and participate in these developing conversations, the Cooperative and the other suppliers in ERCOT are experiencing increased forward prices in the wholesale power market. These are being driven by several factors, including increases in natural gas prices and uncertainty related to future market-design changes. The other factor, in my opinion, is simply emotion. When there is a significant market disruption like we experienced, it is common for buyers and sellers to become much more cautious in their willingness to transact. It will take time for the pain experienced in the market to subside and for market fundamentals to return. This is not the time to make rash or long-term decisions.
As I’ve previously communicated, almost every load-serving entity across Texas grappled with the storm’s record-shattering power-supply costs. Years of proactive financial management allowed GVEC to withstand those extremes, but many energy providers weren’t so fortunate. Our Board of Directors was relieved to be able to delay an adjustment to our G&T rate until May to help ease the burden of high, freeze-related bills. The adjustment in May was sufficient for the Cooperative to recover the costs incurred during the freeze over a long period of time. However, this adjustment is not sufficient to recover the increased costs being experienced in the wholesale power markets since the storm. To be clear, GVEC does have long-term contracts to cover significant portions of its load. The increase in the shorter-term wholesale power market, however, is having an impact on our costs for the portion of our load served by short-term power supply transactions.
A Necessary Adjustment
As a result, beginning with bills dated on or after October 1, 2021, GVEC will be adjusting its G&T rate upward from $0.066 per kilowatt hour to $0.074 per kilowatt hour. This adjustment will result in an approximate $12-per-month increase for an average bill of 1,500 kWh:
The Board of Directors delayed this rate adjustment as long as possible to get past the typical higher usage periods during the summer. It is our hope this will alleviate some of this adjustment’s impact. As a reminder, GVEC is a not-for-profit cooperative driven by a mission of service. We charge only the price we pay for wholesale electricity, without markup through the G&T rate. We will never adjust rates unless absolutely necessary to cover costs and continue delivering reliable, dependable services to those we serve.
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.
I am always interested in your comments and feedback. Contact me by phone at 830.857.1152, by email at email@example.com or by mail at P.O. Box 118, Gonzales, Texas 78629.