Due to the continuing rise of natural gas prices, Clay Electric Cooperative will implement an increase in its rates, beginning with May billing cycles. This is the second rate increase in one month due to soaring natural gas costs, which just hit a 14-year high.
Natural gas is not to be confused with gasoline, which is used to power automobiles. Crude oil is used to manufacture gas and diesel. Natural gas is the fuel used to generate most of the electricity in Florida.
Members using the industry household average of 1,000 kWh of power will now pay $129.90, a $6 increase. The additional amount each member pays each month will vary based on how much electricity is used. The higher cost will be reflected in the Power Cost Adjustment (PCA) on members’ power bills.
“As a not-for-profit electric co-op, we work hard to maintain our costs and provide affordable electricity, but these large increases in the cost of fuel to generate power make this rate change unavoidable,” said Clay Electric General Manager/CEO Ricky Davis. “As soon as prices to generate power go down, your cooperative will lower the PCA.
About 70 percent of the fuel used to generate power in Florida is natural gas, and it’s a sizable part of the fuel generation mix for the co-op’s wholesale power provider, Seminole Electric.
Davis said the increase in fuel and commodity prices are projected to increase the co-op’s electric generation costs more than $28 million for 2022. Natural gas has increased from $2.73/MMBtu in April 2021 to more than $7.80/MMBtu in April of this year.
Clay Electric has been forced to raise its rates 9 percent this year while natural gas prices have increased more than 250 percent in the past 12 months.
“This latest increase in the PCA will not fully recover the estimated year-end increase in generation costs because markets are predicting natural gas prices will continue to climb and fluctuate in 2022,” Davis said. “Since 2018, this is one of only a few increases in the Power Cost Adjustment due to historically stable coal and natural gas prices.”
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.