Due to the natural gas market still being in a state of crisis, Clay Electric Cooperative has no choice but to implement another rate increase. Beginning with September billing cycles, members using the industry household average of 1,000 kWh of power will pay $139.90, 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 costs to generate power, making electricity the co-op purchases from its wholesale power provider, Seminole Electric, more expensive. Current and forecast natural gas prices are quadruple what they were in 2020, and roughly triple from 2021.
While prices at the pump are beginning to ease, natural gas is not to be confused with gasoline, which is used to power vehicles. Crude oil is used to manufacture gasoline and diesel. Natural gas is the fuel used to generate most of the electricity in Florida, and it’s a sizable part of the generation mix for Seminole Electric.
General Manager/CEO Ricky Davis said the increase in fuel and commodity prices are projected to increase electric generation costs more than $45 million for 2022. As a result, Clay Electric has been forced to raise its rates an unprecedented five times in less than a year.
“As soon as prices to generate power go down, your cooperative will lower the PCA,” Davis said. “We work hard to maintain our costs and provide affordable electricity, but these large fuel increases to generate power make this rate change unavoidable.”
The PCA is a separate line item on each Clay Electric statement, which reflects the increases/decreases in the co-op’s cost of power. The cost of wholesale power is more than 70 percent of Clay’s total expenses, so it’s critical all wholesale power costs are recovered 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, it’s 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.