February 2021
Every state in the Southwest Power Pool had historic, extreme cold weather that increased the demand for electricity and impeded the ability to generate it. This necessitated controlled service interruptions and created unprecedented cost increases.
During February 2021, every state in the Southwest Power Pool (SPP) had historic, extreme cold weather that increased the demand for electricity and impeded the ability to generate it. Controlled service interruptions had to be implemented across the SPP for the first time in its 80-year history, and the cost to purchase power increased exponentially.
While it was hard to imagine the magnitude of the cold weather event just a few weeks ago, Prairie Land is facing unprecedented costs associated with the extreme cold weather from February. Prairie Land is not alone; many electric and gas utilities across the Mid-West incurred unprecedented cost increases.
"We know that news reports about astronomical electric bills have our members fearing how much the energy emergencies in February will increase their bills," said Kirk Girard, CEO. "But Prairie Land is committed to doing whatever it needs to find an equitable and manageable solution for our members." Girard also pointed out the extraordinary, voluntary efforts that Prairie Land members made to conserve energy. These efforts helped minimize the number and lengths of the SPP's energy emergency alerts and service interruption orders. "This truly made a big difference, and we can't thank our members enough for the sacrifices they were willing to make to preserve the integrity of the grid."
Prairie Land's wholesale power bill increased over $14 million in February, more than six times higher than a normal monthly billing.
While many components factor into the cost of purchased power, the main drivers of the increase in February were a record demand for natural gas coupled with a reduced supply.
Natural gas is one of the primary resources used to generate electricity at power plants, and as a commodity, it responds to supply and demand to determine the selling price. The reduced supply and high demand situation caused historic high natural gas prices.
Before the winter storm, electric providers had access to natural gas ranging from $2.75 per MMBtu to $4.15 per MMBtu. During the winter storm, natural gas prices ranged from $339 per MMBtu to $999 per MMBtu.
To learn more about the Energy Emergencies in February 2021, visit https://www.prairielandelectric.com/EnergyEmergencyFAQ.
Your electric rate includes a cost per kilowatt-hour that is based upon an expected cost of purchased power. However, the actual cost per kilowatt-hour fluctuates from month-to-month dependent on wholesale power costs, including natural gas, wind, solar, coal, hydro, and nuclear generation. Those fluctuations are reflected on your monthly billing through the Power Cost Adjustment (PCA); Prairie Land does not profit from the PCA as it is a direct pass-through from the power supplier. For most of the previous year (10 of the 12 months), the PCA on your bill has been a credit, due to purchased power costs being lower than expected. However, power costs reached record-highs during February.
Prairie Land understands that by assessing this extraordinary power cost in a single month PCA it could cause many of our members' financial hardship. On March 23, 2021, a rate meeting was held to propose a more manageable method to mitigate our members' immediate impact.
At the rate meeting, the board of trustees unanimously voted to approve the February 2021 Deferred Cost Rider to lessen the immediate financial impact on our members.
- Amortizes the total into 36 monthly installments
- Applies to February usage only
- Includes carrying costs at 1.33% annual interest rate
- Allows early payoff
- Excludes installments of less than $1/mo
The rider allows the extraordinary costs to be broken into thirty-six (36) equal installments and will include carrying costs. The amortized expense will be added as a separate line item called “Feb 2021 Winter Weather PCA” on members' monthly billing beginning with the April 2021 statement. The monthly bill statement will also include a message providing the number of installments that remain. Any member that prefers to pay the full balance upfront may contact our office.
Any member with a total DCR balance of $36 or less will only have one payment installment on the April billing statement, with no additional installments.
Yes. Any member has the option to pay the DCR balance in full if you prefer not to extend the extra expense over the next 36 months. Please call Prairie Land's office if you choose to pay-in-full so we can ensure the additional payment is recorded correctly.
Due to this event's magnitude, Prairie Land does not have sufficient cash reserves to pay the extraordinary power costs. Therefore, Prairie Land must borrow the funds to defer these expenses over the next 36 months for our members. The carrying cost is the interest expense that Prairie Land will pay to carry the deferred expense. This cost is included in each member's monthly amortized amount. If you pay your bill in full, the payoff amount will be reduced by future carrying costs.
There will be a message on each bill stating the DCR balance and the number of installments/months remaining. i.e., "You have XX months remaining of the $XX.XX for Feb 2021 Winter Weather PCA charge.” (See example below; amounts will vary by each individual service.)
If you are on budget bill, the deferred costs will be added to your normal budget bill amount.
Each service's total DCR value will be calculated based only on the February 2021 usage. Therefore, any service that did not use any kilowatt-hours in February will not be assessed any of the corresponding cost.
Should a member move or choose to disconnect electric service, the entire balance of the DCR will be included in and due with the final bill.
Our members and Prairie Land are one and the same, and we only succeed if our members succeed. While Prairie Land cannot control cost impacts such as fuel prices, we are committed to implementing an equitable and manageable solution to mitigate the impact to our members and ensure our rates remain affordable. We will also work with individual members to make sure payment options are in place, and bills are manageable.
If anyone is concerned about being able to pay an electric bill at any time, please call our office toll-free at 1-800-577-3323 and ask about payment assistance options available to members.
LIEAP: The Low-Income Energy Assistance Program (LIEAP), administered by the Kansas Department of Children and Families (DCF), is a federally funded program that helps eligible households pay a portion of their home energy costs by providing a one-time per year benefit. The 2021 LIEAP application period has been extended to May 28, 2021. Prairie Land accepts LIEAP funds but does NOT administer the LIEAP program. Members can find more information on the program, including eligibility guidelines and frequently asked questions (FAQs), on DCF's Energy Assistance webpage. Persons can submit an online application at the KSDCF website at http://www.dcf.ks.gov/services/ees/Pages/EnergyAssistance.aspx.
Local Assistance: Any person can occasionally fall on hard times, and unexpected expenses or circumstances can happen at any time. Several local agencies offer payment assistance for these instances. Eligibility requirements vary.
Payment Arrangements: If a member cannot pay their electric bill by the due date, a Prairie Land customer service representative is available and willing to discuss eligibility and requirements for a payment arrangement to keep the account in good standing. With a payment arrangement, the past-due balance is extended over a specified period in monthly installments. A member is required to pay the agreed-upon monthly installment, in addition to paying the monthly utility charges in full, by the bill due date each month. Paying both the monthly installment and current utility charges gives members extra time to bring their accounts up to date.
Budget Billing (Level Pay): Many residential members take advantage of Prairie Land's Budget Billing Program. This program looks at the account’s average 12-month usage and sets a budget amount to pay each month. This will alleviate fluctuation in the monthly bill and allow you to budget your energy costs for the year.
Yes – Charges billed in any given month are due and payable by the 25th to avoid added charges. If the current bill becomes delinquent, the account will be subject to disconnect notices and possible disconnect.
Cooperatives like Prairie Land set electric rates to recover only those costs for providing electric service and to support the financial strength required to operate an electric utility. As an electric cooperative, we don’t hold sufficient cash reserve funds to cover the costs associated with the winter weather event.
The cooperative business model benefits members in several ways, including lower electric rates and capital credits. Members also benefit since no portion of their electric bill supports investor dividends or company stock prices.
Yes, the entire unit ran at full capacity during the entire winter weather event. Being able to use this as a source of energy saved us approximately 20 cents per kWh. Without Holcomb Station, the cost impact to Prairie Land and our wholesale energy provider, Sunflower Electric, would have been much higher.
During the winter weather event Prairie Land sent out press releases, had radio ads running throughout our territory, posted notifications on Facebook and on our webpage, as well as sending out automated calls and emails regarding the event. Since the event has ended we have continued to provide as much information as possible through our Facebook and webpage as well as using bill inserts to keep our members notified.
On March 23 there was a rate meeting held that was open to all members where we discussed the event and our proposal on how to manage the costs for our members. All members were notified through a bill insert in the March 5 billing statement of the upcoming meeting.