This has been an incredibly cold winter. This past January was one of the coldest on record. Customers may be seeing an increase in their electric bills for this harsh month.
Electric bills are based on usage. The more energy a customer uses, the higher their bill. Customers can get a good snap shot of how the weather has impacted usage this winter by looking at their current electric bills and the amount of kWh they have used. Customers can compare that usage in kWh to their previous bills kWh at other months of the year.
FPB, and our provider Kentucky Utilities (KU), experienced some of the largest winter load peaks ever this winter. In fact, FPB’s January bill from KU for the month’s energy usage was $4.7 million. That is the largest bill ever received from KU by FPB.
When comparing the dollar amount on current customer bills to last winters, keep in mind FPB had our annual rate increase back on July 1 (residential 6.4%), so there has been a rate increase since last winter. Taking that into account, on December 30th the Kentucky Department of Energy released information that FPB customers have the lowest residential rates in the state and are lower than 99% of the nation*.
FPB has been fortunate that we have seen minimal impacts on our electric infrastructure, with very limited problems during the multiple ice storms our region experienced. That is due in part to constant maintenance of our infrastructure, vegetation management programs and preparedness for harsh conditions and its potential impact on our service.
Below is statistical data about FPB, our load demand and the weather of January 2014:
- FPB has 17,300 Residential meters and 4,151 Commercial/industrial/municipal/miscellaneous meters (notice these are meters and not numbers of people served)
- The peak demand for January 2014 was 142.9MW. That peak was recorded on January 7th (High Temp: 14.2 Low Temp: -4.5**).
- That is nearly a 17% increase over the peak Demand for December 2013 (121.0MW on 12/12/13; High Temp: 29.3 Low Temp: 10.2) and a 14% increase over the peak day in January of 2013 (124.6MW on 1/23/13; High Temp: 34.8 Low Temp: 9.9).
- If you compare the January 7 peak to a more “mild” winter day, for instance December 9th of 2013 (High: 33.8 Low: 25.9), the system peak demand only reached 106.9MW. That’s about 33% less than the peak demand on the 7th of this year.
- According to KYMESONET, the Commonwealth's official source for weather and climate data, January 2014 had an average temperature of 25.9 degrees. The average temperature for January of 2013 was 36.1.
- The same KYMESONET data listed the average high for January 2014 at 37.1 and average low of 14.8 compared to 44.2 and 28 in January of 2013.
- Extreme low temperatures in January 2014 far exceeded those of January 2013. KYMESONET reported the following low temperatures in January 2014:
- Nine days with the high temperature under freezing. 26 days with the low under freezing. Seventeen days with a low temperature under 15 degrees and eight days with a low at zero (0) or lower.
- A report from January 2013 shows only three days with a low under 15 degrees and no days reported at zero or colder.
**Temperature data from KY Mesonet, Franklin County.
One particular increase customers will likely see on their bill is in the fuel adjustment cost or power cost adjustment.
Understanding the Power Cost Adjustment (PCA)
What is the Power Cost Adjustment (PCA)?
It is an industry standard system, accepted by all regulatory bodies (Federal Energy Regulatory Commission [FERC] and The Public Service Commission [PSC]), to help recover the cost of fuel it takes to generate electricity.
- The Power Cost Adjustment (PCA) that appears on your bill represents the cost of the fuel for the KU power plants that generate your electricity. For the most part, it is the cost of coal, but it also can include the cost of natural gas and/or purchased power. Purchased power and gas-fueled power both tend to be significantly more expensive than coal-fueled power.
All money collected for the PCA is passed on to our wholesale power supplier KU.
- The PCA is a pass-through expense. The Plant Board collects the PCA from its customers and then passes all of that money on to its wholesale power supplier, Kentucky Utilities (KU). FPB does not keep any of the PCA that it collects. FPB is a not-for-profit utility.
The PCA is regulated and monitored by a government agency.
- Federal government regulators (FERC) allow the PCA charged by KU and their oversight ensures that only proper expenses are included. Proper expenses include the cost of power plant fuel or purchased power.
Why does the PCA vary so much from one month to the next?
The cost of power plant fuel and purchased power can fluctuate significantly from one month to the next for several reasons:
- The market cost of coal, natural gas and purchased power may rise or fall.
- If KU has a coal-fired generating unit out of service for maintenance, then that power must be generated by an alternative source or purchased on the power market, both of which tend to be much more expensive.
- Even if all coal-fired generating units are operational, KU occasionally must operate natural gas-fueled units or purchase power from the market because power usage is so high. This tends to occur on days when it is very hot or very cold because homes and businesses are using more electricity for cooling and heating.
Understanding Your FPB, PCA and Energy Usage Summary
FPB is a not-for-profit utility, when our costs go up for something significant and uncontrollable like energy costs, unfortunately, the additional costs must be reflected in our bills to customers.
Fuel costs are the largest expense for electric utilities, FPB included, and fuel prices can vary greatly due to extreme temperatures. It creates a simple issue of supply and demand. Recognizing this, the PSC, FERC and all other regulatory agencies, have allowed PCA, also called fuel adjustment charges, since the oil embargo of the 1970s. Under utility rate regulation, fuel costs are passed along to electric customers at cost.