On September 9, West Florida Electric Cooperative (WFEC) implemented a change to the wholesale power cost adjustment for members. The change in the wholesale power cost adjustment equates to an additional $5.12 per 1,000 kilowatt hours (kWh) for WFEC members.
As your hometown electric cooperative, owned by the members we serve, we understand the impact increases have on your households. We sympathize with our members who are faced with higher costs at the grocery store, pharmacy, fuel pump and other necessities impacted by the soaring inflation rates our nation is currently facing. Please understand that your cooperative only considers implementing a rate change when we have no other choice. This increase is due to the ever-rising cost of fuel needed for the generation of electricity.
As the nation struggles with rising inflation, electric cooperatives around the country face increased costs for the materials, and goods and services necessary to keep the lights on. We are also experiencing an unprecedented period of rising fuel prices. Since mid-2021, costs for coal and natural gas to produce the electricity powering our homes and businesses have increased significantly.
The additional amount each member pays will vary each month based on the amount of electricity used. The wholesale power cost adjustment is used to “adjust” the amount charged to members when the price of fuels used to generate electricity rise and fall throughout the year. When the cost of power is more expensive to produce, and more expensive for WFEC to purchase from our wholesale power provider, PowerSouth Energy Cooperative, the wholesale power cost adjustment is a charge. When the cost is less, the wholesale power cost adjustment is a credit. You will find an example of the changes to the wholesale power cost adjustment below:
Previous cost per 1,000 kWh (before adjustment)
Energy Charge: 151.37
Wholesale Power Cost Adj: 11.10
Total bill per 1,000 kWh: $162.47 (excluding applicable taxes and fees)
Current cost per 1000 kWh (after adjustment)
Energy Charge: 151.37
Wholesale Power Cost Adj: 16.22
Total bill per 1,000kWh: $167.59 (excluding applicable taxes and fees)
Fuel costs are out of our hands, but we are working with our wholesale power provider, PowerSouth Energy Cooperative, to reduce the impact of higher fuel costs and stabilize rates. As part of these efforts, due to the unpredictability in natural gas prices, PowerSouth adopted a risk management policy to address natural gas price volatility. This policy includes “fuel hedging” contracts to help PowerSouth stabilize natural gas
price impacts and prevent sudden, major spikes in pricing.
Through a partnership with other electric cooperatives across Alabama and northwest Florida, we secure generating resources from PowerSouth and gain economies of scale that otherwise may not be available. These combined efforts have helped to reduce the impact of higher fuel costs and stabilize rates to a degree, but have not mitigated all costs associated with unprecedented fuel prices along with increased costs for materials, goods and services.
Recently, PowerSouth implemented a rate increase to compensate for an additional increase in fuel and purchased power costs. PowerSouth is seeing the highest sustained prices for fuel they have witnessed in a decade. Global demand and tight fuel supplies, as well as labor shortages at coal mines and railroads, are affecting the cost of producing power. As a result, this has increased costs that WFEC must pay for wholesale power and will be reflected in the wholesale power cost adjustment on your bill. As a not-for-profit organization, we only collect what is necessary to recover our costs. At this time, it is difficult to pinpoint how long this fuel adjustment might last or if there will be a need for an additional increase in the future.
The impact of rising fuel costs and market conditions are not only affecting WFEC, the impact is being felt across the nation. As your member-owned, not-for-profit electric cooperative, we have a mission to keep the lights on at the lowest possible cost. We take this role seriously, and we are responding to market conditions and public policy shifts as best we can.