A two-year rate increase was unanimously approved by the Pedernales Electric Cooperative board of directors at a regular meeting Aug. 20. Beginning Oct. 1 and continuing for 24 months, members can expect to see an additional $8 to $12 added as a line item to their bills to pay for costs accrued during the February winter storm.
No one showed up for the public comment period, but during a presentation by Chief Financial Officer Randy Kruger, several members voiced their own concerns about agenda item six: approval of a resolution to amend tariff and business rules in relation to “Winter Storm Cost Recovery and Delivery Charge Adjustment.”
“It’s not an enjoyable thing to do, but we have to take this action to pay our bills,” said District 5 Director James Oakley at the meeting. “There is no other way to do it.”
“Members should know that we are doing everything we can to keep bills as low as possible,” District 1 Director Milton Rister said. “I want to thank the staff for doing all you can to minimize a rate increase on our members.”
Board Chair Emily Pataki commented on a slide presentation that depicted how rates had decreased over the years since she first joined the board in 2014.
“It shows how we are committed to lower rates,” she said. “It pains us to go in the other direction, but we want to act in the best interest of the long-term health of the organization. We’ll get it back. This is not the end of the road.”
The winter storm cost the cooperative $180 million, Kruger said. Of that, $20 million was recouped from a settlement with the Energy Reliability Council of Texas, bringing the total cost down to $160 million.
The money had to be borrowed to pay the bills, most of which went to the Lower Colorado River Authority for increased energy costs. Supply-and-demand issues raised the price of energy in Texas to $9,000 per megawatt-hour for 32 hours during the storm — a 300 percent increase, Kruger said.
Because PEC has such a good credit rating (AA-), it was able to borrow the money at 0.17 percent.
“That’s about as cheap a credit as you can get,” Kruger said. “That is going to save us about $3 million a year. Now, we have to work that debt off the balance sheet to maintain our current credit rating.”
He explained that taking no action to pay off the debt over the next two years would cost the cooperative even more and could damage its rating.
“If we let it sit on our balance sheet, it has a compounding effect,” he said, adding that it negatively affecting the co-op’s credit rating would increase the cost of debt.
Because the board had additional questions about the expected rate increase that needed to be answered by staff in executive session, Pataki decided to postpone the vote until later in the meeting.
The board went into executive session around 10:30 a.m. Friday, returning to open session at 3 p.m.
“The resolution regarding the winter storm cost recovery and delivery charge adjustment is being discussed in executive session as it falls under contract and competitive matters,” said a PEC spokesperson in an email to DailyTrib.com during the closed-door session. “Rates are competitive in nature. Some of the board members have questions and the nature of their questions fall under executive session.”
The spokesperson added that the discussion in executive session was not planned.
On the executive session agenda were five items under legal matters, eight items under contract and competitive matters (where the rate increase was also added), two under real estate matters, three under safety and security matters, and one under personnel matters.