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Will electric bills increase?

For the next couple of years, energy experts have warned, supplies of electricity and natural gas look tighter in Texas, and the state’s consumers can expect to pay more for their power.

This news, from a November story in the Fort Worth Star-Telegram, isn’t surprising to those of us who work in the electric industry. Environmental concerns and stricter regulations have slowed the building of power plants. Extreme weather and a growing population have put more demand on plants already existing.

The amount of wind and solar power produced in the state, while growing, still isn’t enough to fill the supply gap. When demand grows and supply dwindles, basic economics tell us that prices will rise. The latest numbers from the Energy Reliability Council of Texas (ERCOT) show that capacity reserves are expected to fall from 12.11 percent in 2012 to an alarming level of 3.55 percent by 2015. ERCOT’s own “safe” level for capacity is 13.75 percent.

For customers of the state’s for-profit electric companies, there is another component of price—the pressure on those companies’ CEOs and boards of directors to grow revenue and create dividends so shareholders can be paid. Thus, a portion of the bills that their customers pay ends up in the stockholder’s pocket.

That’s a factor that the leaders of South Plains Electric Cooperative don’t have to consider. My mission, and that of the Cooperative’s directors, who are all fellow co-op members, is to bring you a reliable supply of electricity at the best possible price. Period. You won’t see a markup on your bill to create profit for shareholders, because the cooperative operates on a not-for-profit basis. You, the members, are its owners.

If the price of natural gas rises, electricity generators that burn gas to run turbines will pass the increased cost of fuel along, which you will see reflected in the fuel component (or PCRF) of your bill. The cost you see there is exactly the cost the generating entity charges us. We don’t tack on any extra charges.

We do aim to run the co-op to bring in more money than is needed to simply pay the bills. The positive cash flow indicates a healthy business and is a necessary requirement for the bond and loan markets.

Some of that money is used to maintain and improve the system of wires and equipment that delivers electricity to you and to build lines for new members.

That income over expenses, which we call margins, goes back as an investment in the Cooperative and, eventually, is returned to you as capital credits.

We want to charge you as little for electricity as we can and still run a strong business. But some price increases cannot be avoided.

We can always hope that the forecast for higher rates is wrong. But know that we are looking out for you by keeping you informed and staying involved with policy makers.

We also offer the TogetherWeSave website that’s packed with easy, inexpensive energy saving tips. Check it out at www.TogetherWeSave.com.