Craighead Electric Cooperative is proud to service over 28,000 members in seven northeast Arkansas Counties. As a distribution cooperative, Craighead Electric Cooperative is a member-owned not-for-profit electric company, which purchases electric power at wholesale and distributes it to members within its service territory. Its profit or margins are put back into the cooperative to help run the business efficiently or are returned to the member-owners through Capital Credits. A cooperative exists to provide high quality service at the lowest possible price.
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Natural gas price spikes lead to increased electric bills for cooperative members
Arkansas electric cooperatives are setting new peaks for winter power consumption as it is the coldest winter the state has experienced in 20 years. Higher-than-normal usage results in higher-than-normal bills, and this year higher prices in the natural gas market have added to the burden on consumers.
"The cold weather and increasing demand has caused natural gas prices to jump 18 percent in the last month and approximately 47 percent in the past year," said Duane Highley, president and CEO of the Electric Cooperatives of Arkansas. "Natural gas that was priced at $4 per million BTU not quite a year ago was recently offered for electric generation in Arkansas at almost $40 per million BTU. This represents a 1,000 percent increase, which is unimaginable."
Highley said that the level of coal-based generation in Arkansas Electric Cooperative Corporation’s (AECC) generation resources protected electric cooperative members from the full effect of the spike in natural gas prices.
"AECC’s mission is to provide electric cooperative members with reliable and affordable electricity," he said. "AECC owns coal, hydro, and gas-based generation stations throughout Arkansas, plus the cooperative has agreements for wind energy. This fuel diversity provides reliable supply, and it also helps moderate pricing levels. Furthermore, AECC uses an economic dispatch approach to selecting the generation sources that are used. If we can purchase energy from another provider at a rate less than our generation cost, then we pursue this option to ultimately obtain savings for cooperative members. Our membership in the MISO (Midcontinent Independent System Operator, Inc.) market enabled AECC to purchase wholesale energy below AECC’s gas production cost this past month, thus shielding our members from the full effect of rate volatility caused by the spike in natural gas costs."
According to Highley, the good news is the high natural gas prices are hopefully temporary, and will return to normal as demand decreases. However, natural gas prices are based on regional and national demand levels and priced by commodity markets. "Unfortunately, the natural gas commodity market is the most volatile of all commodity markets. This is one of the reasons that AECC and other electric cooperatives employ diverse fuel sources in our generation portfolio and why we are fighting hard to keep coal plants as part of this mix. We dispatch our coal units as much as possible, because they provide our members with lower prices than gas. Although the EPA’s goal is to shutter coal plants, this year’s winter proves that such a move would diminish our reliable and affordable electric supply in Arkansas."
It All Counts
With severe winter weather and extremely cold temperatures hitting our area over the past month, some members might be experiencing higher electric bills than usual. Here are just a few things that could be contributing to higher bills this winter:
• The temperatures over the last month have been colder than last year, in December 2012 the average low temperature was 37.2˚F and for December 2013 the average low temperature was 29.9˚F; therefore your heating system has worked longer to keep you comfortable. • Your previous bill may have included two separate holidays - Thanksgiving and Christmas - which can lead to higher electricity usage as families are gathering and spending time together. • Severe winter weather has also forced multiple days with school closings, which means more people staying at home and using electricity. Please keep in mind that all electricity usage counts and adds up. The more days you're home, combined with colder weather, the higher your usage will be.
**Our good friends at Ozark Electric Cooperative were kind of enough to let us share this info.