UNDERSTANDING POWER COSTS Winter Storm Uri Market costs Base rate transmission Delivered power
The PCRA has increased for New Braunfels Utilities customers over the past year due to energy market costs. The average NBU electricity bill from July 2021 compared to July 2022 increased by 39%.
customer’s bills, NBU Chief Adminis- trative Officer David Hubbard said. “Our cost of energy has increased to the point where our base rates are no longer set appropriately enough to recover the full cost that we need for the cost of energy. And that’s why the PCRA rate is now higher than the base rate,” Hubbard said. Regina Manfredi, a New Braunfels resident of 17 years, said she began researching the PCRA charge after watching it rise on her utility bills over the past several months. Manfredi has spoken at several NBU meetings and passed out a petition signed by over 6,000 NBU customers to City Coun- cil members during an Aug. 8 New Braunfels City Council meeting. “I think it is important that [NBU customers] understand what that PCRA is comprised of today. And that is loan payback, cost overruns and cash reserve efforts,” Manfredi said. “And those are the three things that …, if that’s what’s going to drive the PCRA, NBU leadership has allowed for it to get incredibly out of hand. And we need to go look in those three areas together as a community to say, ‘All right, what can we fix?’” Debt from Uri During Winter Storm Uri in February 2021, NBU incurred costs of $93 mil- lion due to the high demand and cost of energy. According to Hubbard, the company only had 30 days to pay back the cost of the winter storm. Because of this, all of the money in the power reserves and contingency reserves was used to cover those debts. Addition- ally, a two-year $100 million loan was taken out by NBU to cover the cost, according to Melissa Krause, chief stra- tegic communications and security officer for NBU. Krause said $50 million of the loan was used toward the remaining debt from Uri, and the other $50 million was
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do the charges reflected on the PCRA. NBU stated that as a not-for-profit entity, only actual costs are charged and not marked up for profit. NBU officials also cite inflation, supply chain issues and effects on the global energy market caused by the war in Ukraine as contributing to high natural gas prices. According to NBU, the utility also saw a 32% increase in electricity usage by customers in July of this year compared to July 2021 due to the dry and hot summer Central Texas is experiencing. “It’s been a difficult summer for NBU customers. There’s been some anger, frustration and certainly some worry about high utility bills from what we’re experiencing this summer,” NBU CEO Ian Taylor said. An estimated 28% of the PCRA will go toward rebuilding NBU’s reserves following debt incurred during Win- ter Storm Uri, with customers paying $0.024 per kilowatt-hour. The remain- ing 72% of the PCRA is attributed to energy market volatility—a charge of $0.054 per kWh. “The way to think of the PCRA is that it is a commodity market where we are buying our electricity from. And because it’s a commodity market, there’s volatility,” Taylor said. “So the PCRA is simply something that goes up and down to cover the volatility in the market. So there’s the base rate plus the PCRA. We take those two together, that is the total cost of electricity.” The variable cost of generation and transmission rates are what make up the PCRA, according to NBU. Transmis- sion rates are determined by ERCOT once a year, while the generation rates are more variable based on the energy costs in the ERCOT market. The gener- ation rates include the remainder cost for buying power that is not covered by the base rate electricity charge on
Base rate-generation Electric availability
39% increase
$300
HOW DOES NBU PURCHASE POWER?
$37.21
$250
NBU purchases power in the Electric Reliability Council of Texas (ERCOT) through a financial hedging program that finds ways to offset the cost of power prior to entering the Day Ahead or Real-time energy markets. Below is how NBU purchased power in July 2022:
$200
$97.79
$37.21
$150
$22.19
Long-term contracts
Short-term contracts
$100
$90.00
$90.00
97%
$50
$15.51 $24.30 $9.36
$14.99 $23.22 $9.36
3%
$0
Forward commodity market • Future energy needs are predicted and purchased through a financial hedging program. Renewable generation • Any type of renewable resource that is used to generate electricity such as wind and solar LONG-TERM CONTRACTS: Day ahead energy market • The purchase of SHORT-TERM CONTRACTS: electricity at financially binding day-ahead prices for the next day Real-time energy market • The purchase or sale of electricity during the operating day dependent on need.
July 2021
July 2022
COST COMPARISON
The average electricity bills of average residential customers of comparable utility companies for the month of August 2022 are shown below.
San Marcos Electric Utility
$173.43
City of Seguin
$184.73
Pedernales Electric Coop.
$196.68
Austin Energy
$198.46
Guadalupe Valley Electric Coop.
$213.67
New Braunfels Utilities
$240.44
CPS Energy
$255.24
SOURCE: NEW BRAUNFELS UTILITIES/ COMMUNITY IMPACT NEWSPAPER
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