Victory Electric members will see a new line item and message on billing statements beginning in April. The Extraordinary Event Recovery (EER) bill component is intended to recover the additional $15 million in wholesale power costs incurred during February’s extreme cold weather. To lessen the financial burden on members, Victory Electric is extending payment of the EER over 24 months.
“While Victory Electric cannot control cost impacts such as fuel prices, we are committed to implementing an equitable and manageable solution to mitigate any direct impacts to our members and ensure our rates remain affordable,” said CEO Shane Laws.
Members can find answers to frequently asked questions below, or you can also call a member services representative at 620-227-2139 or visit our office at 3230 N. 14th Ave., in Dodge City for more information.
FREQUENTLY ASKED QUESTIONS
What happened to cause the increased February Wholesale Power Costs?
Mid-February’s winter storm, or polar vortex, created a high demand for electricity, a subsequent overload on transmission lines, constraints on natural gas, and the decrease in wind energy. The extreme cold, which set records in many cities affected last week, crippled all types of power plants and fuel. The high demand for natural gas to run electric generating units and the impact of frigid temperatures caused a shortage of natural gas.
Southwest Power Pool (SPP), one of two regional transmission organizations with headquarters in Little Rock, Arkansas, issued a Level 3 Energy Emergency for the first time in its 80-year history on Monday, Feb. 15. Its counterpart, Electric Reliability Council of Texas, also issued alerts and instituted rolling blackouts in Texas. SPP oversees the bulk electric grid and manages the reliability for a 14-state region that includes Kansas. SPP does not generate electricity or own power lines or substations but rather is tasked with operating the power grid in a safe and reliable manner.
The increase in wholesale power costs was due to the record-high demand for natural gas in the third week of February. In addition, the extreme cold caused many gas wells and processing facilities to freeze, which 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 pricing. The supply-demand situation caused historic high natural gas prices. Prior to 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.
Victory Electric was not alone - electric and gas utilities across the plains states and Midwest also incurred unanticipated cost increases.
“It is easy to see the enormity of a crisis when a storm causes lines to fall and poles to break,” said Shane Laws, CEO. “But in an energy emergency like we experienced in February, it’s hard to comprehend why costs would increase so much when there’s no physical damage.”
How is Victory Electric recovering the increased wholesale power costs?
In a normal month, electric utilities like Victory Electric recover the fluctuating cost of fuel for wholesale power generation — natural gas, wind, solar, coal, hydro or nuclear — the following month through the Energy Cost Adjustment (ECA). The ECA can be a charge or a credit on your electric bill depending on energy markets and the price of fuel. The ECA allows the cooperative to respond monthly to market fluctuations without implementing a rate change. Cooperatives do not make a profit on the cost of fuel for power generation, it’s a direct pass-through to our power supplier. Electric cooperatives recover fuel costs to remain financially whole. In 22 of the last 24 months, Victory Electric was able to pass along savings to our members from the reduction in fuel costs for power generation in the form of a credit ECA. One month, Victory’s Electric’s ECA reached -2.3₵ / kWh, which for the average residential electric bill of $108 equaled $19.53 in savings or reduction in the amount owed.
Victory Electric recognizes when an extraordinary event happens like February’s extreme cold weather, recovering increased wholesale power costs through a single-month ECA charge would create a financial hardship for our members. The Victory Electric board of trustees proposed the implementation of an Extraordinary Event Cost Recovery Rider. The rider allows Victory Electric to lessen the financial burden on cooperative members by extending the recovery of the increased wholesale power costs over 24 months.
Victory Electric’s board of trustees hosted a public information session on Monday, March 29, at 6 p.m., at Victory Electric’s headquarters to address member questions and concerns followed by a special board meeting to vote on the Extraordinary Event Cost Recovery Rider. All Victory Electric members were sent notification of the rider and invited to attend the public information session.
Video of Public Information Session
Public Information Session Presentation
Extraordinary Event Cost Recovery Rider
What will my bill look like with the Extraordinary Event Recovery (EER)?
The Extraordinary Event Rider (EER) on electric bills is intended to recover the additional wholesale power costs incurred specifically for a member’s electric use between February 15-19, 2021.
On average, a Victory Electric residential member’s EER is approximately $300, which when extended over 24 months will be $12.50/month. The average small/large commercial member with an electric bill of $471 will see an estimated EER of $1,500.
A new line item titled “Extraordinary Event Recovery” is located in the “Current Month Energy Charge” section of your electric bill. This is the EER installment, which starts in April 2021 and will remain for 24 months. In the column to the right, members will find a message indicating your remaining EER account balance as well as the number of remaining installment months.
How will I know the total amount how many installments remain?
There will be a message on each bill stating the total EER account balance and the number of installments/months remaining. i.e., "The February 2021 Extraordinary Event Recovery balance is $XX.XX with XX installments remaining.”
For EER balances less than $24, the entire balance will appear on April’s bill with no additional payment installments.
Can I pay my whole EER account balance?
Victory Electric realizes some members might want flexibility on paying for the EER. Therefore, yes, any member has the option to pay the EER balance in-full at any time over the next 24 months. A member can pay the EER balance in-full at any time over the 24 months, but you MUST call or visit our office. Members who pay the balance in-full will only be responsible for the interest incurred through that specific billing period. Victory Electric must manually apply the extra payment toward your EER balance, and if we aren’t notified, it will simply appear as a credit on the next month’s bill.
How does the EER affect budget billing?
Monthly budget billing amounts were not recalculated, BUT the budget amount will increase by the members individual EER installment amount (rounded to the next dollar). If a member pays the EER in-full, the budget amount will revert to the original budget amount. If using AutoPay, be mindful the AutoPay amount deducted or charged will automatically increase.
I have PowerMyWay account. How will the EER affect my bill?
PowerMyWay accounts will experience one small change with the introduction of the EER. The monthly EER installment amount will be deducted from the account balance each month on the day Victory Electric performs our monthly billing calculation. Unless the EER balance is paid in-full, it is advised members monitor PowerMyWay account balances each month on bill calculation date (April 9, but it's normally between the 9th and 12th of each month) to ensure the balance isn't depleted. If a PowerMyWay account is too low and the EER depletes the balance, a disconnect notification will be sent the next morning (April 10). If a payment is not applied to the PowerMyWay account the same morning the disconnect notification is sent, a member risks disconnection that afternoon.
Because April is the first month for the EER bill component and the bill calculation falls on a Friday, Victory Electric elected to suspend PowerMyWay disconnections over the weekend. Normal PowerMyWay payment and disconnect protocols will resume Wednesday, April 14.
If you are having a difficult time paying your bill, please contact one of Victory Electric’s member service representatives BEFORE you are late or get behind. We can help determine payment arrangement eligibility or direct you to an assistance program.
There are several payment assistance options available to members. Eligibility requirements vary.
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 ends Friday, May 28, 2021, at 5 p.m., or until funding is gone. Victory Electric accepts LIEAP funds but does NOT administer the LIEAP program. Members can call Garden City DCF at 620-272-5800 or you 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 https://cssp.kees.ks.gov/apspssp/sspNonMed.portal.
Local Assistance – Any person can occasionally fall on hard times and unexpected expenses or circumstances can happen at any time, and several local agencies offer payment assistance. Eligibility requirements vary.
Payment Arrangements – If you cannot pay your electric bill by the due date, a Victory Electric member service representative is available and willing to discuss eligibility and requirements for a payment arrangement. A payment arrangement allows a member the opportunity to pay off a past-due bill balance to keep your electric account in good standing. With a payment arrangement, the past-due amount is extended over a specified period of time — this amount is called a monthly installment. 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 your account up to date.
Can I be disconnected for not paying the EER?
Yes. Any charges for electric service billed in any given month are due and payable to the cooperative charges. If the current bill becomes delinquent, the account will be subject to disconnect notices and possible disconnect.
What if I transfer my service or disconnect electric service?
If a member disconnects electric service, the entire EER balance will be included on the final bill. For transfers of electric service within Victory Electric’s service area, the remaining EER balance and number of remaining payment installments transfers with the member.
If I did not use any electricity in February, will I see a bill increase?
The EER amount is based on your individual electric use between February 15-19. Only members who used electricity on those specific dates will have an EER balance, and the impact will be less for any member who switched to self-generation, conserved energy, or had an outage as a result of the rotating power interruptions. Meters not in use during February 2021 will not be affected, and neither will future electric use. The EER is simply a payment for the excess costs incurred in February 2021.
Why does the price of natural gas affect my electric bill?
Demand for natural gas was at a record high the third week of February. And, the extreme cold caused many gas wells and processing facilities to freeze, which 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 pricing. The supply-demand situation caused historic high natural gas prices. Prior to 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.
Each month, electric utilities recover the fluctuating cost of fuel — natural gas, wind, solar, coal, hydro or nuclear — through the Energy Cost Adjustment (ECA). This can be a charge or a credit on your electric bill depending on energy markets and the price of fuel. Any increase in fuel prices that Kansas electric consumers see on future bills will be a direct pass-through to our power supplier. Electric cooperatives do not make a profit on the cost of fuel. Electric cooperatives recover fuel costs to remain financially whole.
How can we prevent these types of outages and high bills again?
Every day, 24/7, the SPP oversees, manages, and balances the dispatch of the energy in its service territory. The fact that we can flip a switch and have access to electricity the majority time underscores the resilience of the U.S. electric grid.
Sometimes, however, Mother Nature packs such a wallop that contingency measures must be employed. Such was the case in February when many areas of the Midwest experienced record-breaking lows. While we have faced frigid temperatures in other years, the February event included variables that compounded the restraints on the grid resulting in a “Black Swan” event or “the perfect storm.”
The February weather event will continue to be analyzed and debriefed by entities across the U.S. Lessons learned will be recorded and appropriate changes addressed. As with all infrastructure decisions, the path forward must include an analysis of cost and risk (i.e., whether the cost of electricity increase substantially to prepare for a historic event such as February’s weather pattern).
What is a rate rider?
A rate rider modifies or adjusts an existing tariff. In the case of the Extraordinary Event Cost Recovery Rider, it modifies the existing Energy Cost Adjustment (ECA) tariff to allow Victory Electric to extend the recovery of February’s increased costs over 24 months.