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PEC approves rate increase to pay for winter storm

PEC winter storm fee

The blue line shows the decrease since 2014 of electric rates for the Pedernales Electric Cooperative. At the end on the right, the sharp rise on the chart indicates the temporary rate increase approved by the board at its regular meeting Aug. 20. Courtesy image

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 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.

2 thoughts on “PEC approves rate increase to pay for winter storm

  1. The word audacity is defined as rude or disrespectful behavior. I now choose to associate this word with the local electric monopoly, the PEC.

    The unchallengeable “winter storm surcharge” to be levied on 360,000 meters for at least 24 months is a slap in the face to all area customers. We the people are nothing more than cash meters being forced to pay off mismanagement by the monopoly we know as the PEC.

    We, the meters, are being forced, not asked, to pay off $200 million in debt that the PEC rang up this year. We, the 360,000 and rapidly growing cash machines are being forced to pay for storm damage because of the ineptitude of the PEC. A number of us were treated to the PEC rolling blackout which caused busted pipes and water heaters. Unfortunately, I could not force anyone to pay for my $4,000+ of damage due to the PEC rolling blackout that did not roll for over 24 hours at one of my places and never rolled at all at another. It’s funny how some folks never lost power at all.

    In a year of Covid, ballooning inflation, unstable job markets, unstable world politics, rampant unemployment it seems a bit much for a monopoly to ask it’s captured subjects to pay for their obviously horrible negotiations with the LCRA. Whomever signed the contract for purchasing wholesale electric prices of $9,000 per megawatt-hour (compared to their normal rate of $38 to $40), ancillary services of $20,000 per megawatt-hour (compared to $40) and natural gas costs of between $250 to $300 per BTU which were normally $2.50 per BTU needs to be terminated and everyone up the food chain should resign.

    The PEC says that around 109,000 customers lost power. With a meter count of 360,000 one can assume that many customers were not affected by the PEC fiasco. Why not have the meters that did not have to pay insurance deductibles and the forecasted mushrooming growth in PEC subjects pay off the mismanagement? Why not pass on a large percentage of this $200M to the huge growth the PEC keeps braying about in Liberty Hill, Bertram and Marble Falls?

    A quick non-profit search shows that 4 PEC executives make over $400,000 per year. 5 make over $300,000 per year. 10 are pulling down over $200,000 a year. I suggest they need to share in covering for their mistakes. By levying a 50% pay cut (still leaving them more $$$ than most of their customers) for the next 24 months those 19 executives alone could pay down $5,000,000 of their mistake.
    PEC marketing folks, in high gear since the storm, wrap this up in a nice little package of only an $8 to $12 surcharge increase. They say they want to keep themselves financially healthy and they can move on and not saddle us with 20 years of debt. How thoughtful of them! I wish I could have voted on how to handle the PEC self-administered debt.

    Storms like we had in February are not normal, but every electric coop knows they will endure them. Most plan for them. Most Coops alert their customers a few days in advance. Most Coops COMMUNICATE with their customers! Equally shared rolling blackouts were expected. This clearly did not happen. Why not?

    PEC acts as if they did everything right during this storm. The PEC was clearly not prepared for this storm and have now had 6 months to practice damage control and public relations work to shuck & jive, dodge and off load the blame. We live in a world where nobody can accept the blame for clearly screwing up. It is always somebody else’s fault.

    Damaged poles, wires and trucks in the ditches? That is your problem PEC. Why should we pay for your quest to maintain your AA rating with Fitch?

    PEC said, “Everyone is doing their best to make sure the lights stay on this summer.” That’s reassuring.

    PEC said “We’re the largest distribution co-op in the country, much less the state.” I say great, act like it!

    PEC said, “We keep setting new records for number of applications we see each month, for numbers of miles of line we are putting in, for number of meters. Your average co-op in the United States is 13,000 meters. The Marble Falls regional district has 31,000 meters, so it is more than twice as large as your average coop, while Bertram/Liberty Hill has 17,000 meters, so it is also far larger than your average co-op.” Fine! Maybe PEC is a lumbering and arrogant elephant?

    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. “We didn’t want to put this on the backs of our members.”

    “We get better terms for power supplies based on our good credit rating,” Kruger said. Just like the LCRA rate you accepted?
    The PEC monopoly needs a lesson in common decency. Own up to your mistakes. Treat your cash cow meters with respect.

    Nobody bails me out when I make a mistake or suffer a loss!

  2. It seems like PEC is going back to their old greedy ways. Since my power was off for 15 hours perhaps I should send PEC the bill I got from my plumber for repairing my broken pipes they can taken my $240 from the bill and cut me a check for the difference. Between this additional fee and trying to make sure anyone trying to set up solar will be paying high connection fees and getting less $$ on any kw they are forced to buy back.

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