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PEC members could see temporary $10 monthly rate hike to pay for storm

Pedernales Electric Cooperative linemen during winter storm Uri

Pedernales Electric Cooperative linemen work to restore power during winter storm Uri in mid-February 2021. The effects of a week of snow and ice across Central Texas resulted in increased costs and could mean a two-year temporary rate hike for PEC members. Photo courtesy of PEC

A temporary rate hike of about $10 a month to pay for costs of the February winter storm is on the Aug. 20 meeting agenda for the Pedernales Electric Cooperative board of directors. The increase, which is due to begin Oct. 1, will be in place for 24 months if approved.

“We didn’t want to get into a rate discussion,” Chief Financial Officer Randy Kruger told board members during the July 16 regular meeting at PEC headquarters in Johnson City. “We didn’t want to put this on the backs of our members.” 

After looking at several options and talking to rating agencies and the cooperative’s banks, Kruger said the rate increase was the only way to keep from incurring lasting and expensive debt to pay the $160 million cost of the storm. 

He also pointed out that the original price tag was $180 million, most of which was paid to the Lower Colorado River Authority for increased power costs. LCRA plants were down for part of the storm, requiring PEC to buy natural gas power at a higher price. 

A dispute with the Energy Reliability Council of Texas over billing was settled in PEC’s favor, resulting in a $20 million reimbursement and dropping the cost of the winter storm to $160 million.

The average co-op member uses about 1,250 kilowatts per hour a month, which costs about $126.

“When put in place, the result (of the increase) will be $10 to $12 per member on average,” Kruger said. 

Other utilities are taking the same route, but most of them are extending the temporary increase over five, 10, and even 30 years, he continued. 

A chart of rates over the years showed a decline in the average PEC electric bill since 2014. The proposed increase will produce a sharp incline in the graph, but “after two years expires, it will come back down to where we were before,” Kruger said.

“Pre-storm, our debt was seven times our operating cashflow,” he said. “If we absorb the storm debt post-storm and take no action, the spread gets much worse.” 

That could lower the co-op’s debt rating, which is currently AA-, a good, healthy rating. Moving into the B ratings would mean paying higher interest on debt, costing members even more in the long run. Ratings in the As also mean better prices on power supply. 

“We get better terms for power supplies based on our good credit rating,” Kruger said. 

A final vote on the increase is expected at the Aug. 20 meeting. The meeting begins at 9 a.m. at PEC headquarters, 201 S. Avenue F in Johnson City. Meetings are held in person and can also be viewed online

suzanne@thepicayune.com

11 thoughts on “PEC members could see temporary $10 monthly rate hike to pay for storm

  1. Add to all of the above the fact that PEC has thousands of new customers on the horizon with all of the new housing and commercial developments. That increased revenue should offset this storm debt.

    Let’s not forget that when PEC was found guilty of misuse of funds years ago, we the members never received full compensation for that. The “credits” given to repay the members have been spread out over many years.

    One last thought: I vote for term limits on board members, and full disclosure of their salaries. They should be pitching in, also.

  2. what if you were not a pec customer in february? we didn’t even live in the county until march!

  3. TWO YEARS IS NOT A TEMPORARY INCREASE!!!! I am a Senior Citizen. this will HURT ME!!!

  4. PEC should be paying us! Four years ago I paid the PEC an exorbitant price to get electricity to my build site. I had to cut the path out for them, negotiate for them an easement to get permission to run a line over my fence to get to their service. Now, this obviously bloated monopoly, has the audacity to force all of their customers to pay for their mistakes.

    I have 3 meters with the PEC. 2 are in Lake Victor and the other is out by Silver Creek. During the February storm the Lake Victor meters NEVER were turned off. My residence meter overlooking Lake Buchanan was down for more than 24 hours consecutively. Due to the PEC’s mismanagement of shutting off grids, I lost 3 tankless hot water heaters. It cost me “only” $1,000 due to insurance coverage but my insurance company paid off the remaining $3,000 to replace the heaters.

    I have already overpaid the PEC for their selective shutdowns during the storm. 2 very remote meters did not miss a single minute of service yet my residence meter was shut down by the PEC for more than a full day. The PEC caused over $4,000 of damage and forcing me to take my showers outside in February and March with a garden hose due to back orders on the replacement water heaters.

    Every single PEC executive and manager should be “penalized” by taking a 25% to 50% pay cut for the next 24 months. For these people to sit in their brand new offices and dictatorially impose an unchallenged penalty on us, the consumer, is unAmerican. We live in a society where everyone else is to blame for their problems and mistakes. Nobody has the backbone to admit they made a mistake or multiple mistakes that negatively impact thousands of customers.

    We the people need to take a stand against this monopolistic empire and demand that we be allowed to tell them how to recoup the millions of $$$s of their mistakes.

  5. The primary culprit is neither ERCOT nor the PEC, but the state legislature, which created a
    market structure which provides no incentive for the construction of new thermal generation.
    Since solar and wind have no fuel cost, they will always be the low bidder to supply the grid when
    the sun shines and the wind blows. Aging thermal generators cannot compete, are retired, and
    not replaced, because new plants won’t run enough to recover the cost of capital. As a result,
    Texas has lost thermal generation capacity in the last 10 years, and doesn’t have enough to
    carry the maximum demands when wind and solar are not online.

  6. Just curious, how much did pec spend just on that fancy marble falls office complex? Was it really necessary?

  7. $240.00 from over 350,000 accounts – over $8.5 million dollars, this is totally ridiculous !

  8. This temporary rate increase does not seem fair…and most temporary increases become lasting.

  9. I will pay the rate increase, BUT I totally fault ERCOT with this. The state representatives that put ERCOT in charge should also pony up ALL the shortfalls. I could have used many more expletives, but being the nice guys I am…

  10. I’d say take the top 15 salaried big shots and make them pony up 10% of there yearly take. Ought to bring in almost 3/4 million bucks for repairs. . Heck CHIEF EXECUTIVE OFFICER ( Julie Parsley) on a 46 hour workweek brings in $437,450 less perks. 10% would be $43.,700 and change.

  11. Thank you, ERCOT. Mismanagement and failure that falls on the backs of ratepayers rather than those responsible.

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